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The impact of innovation on CO2 emissions: the threshold effect of financial development

We show that innovative activities exacerbate environmental degradation based on data covering 52 countries between 1990 and 2014. Yet, innovative activities carried out in countries with greater financial development pose less environmental harm. Additionally, we show the equity market is more effe...

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Main Authors: Yu, Danni, Soh, Wei Ni, Amin Noordin, Bany Ariffin, Yahya, Mohamed Hisham, Latif, Badar
Format: Article
Published: Frontiers Media 2022
Online Access:http://psasir.upm.edu.my/id/eprint/103577/
https://www.frontiersin.org/articles/10.3389/fenvs.2022.980267/full
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spelling my.upm.eprints.1035772023-05-22T03:59:37Z http://psasir.upm.edu.my/id/eprint/103577/ The impact of innovation on CO2 emissions: the threshold effect of financial development Yu, Danni Soh, Wei Ni Amin Noordin, Bany Ariffin Yahya, Mohamed Hisham Latif, Badar We show that innovative activities exacerbate environmental degradation based on data covering 52 countries between 1990 and 2014. Yet, innovative activities carried out in countries with greater financial development pose less environmental harm. Additionally, we show the equity market is more effective concerning dampening effect of innovation on carbon emissions. With a dynamic panel threshold method, we find that innovation is significantly associated with improvements in environmental quality when the private sector credit and market capitalization of listed domestic companies exceed threshold levels of about 65 and 16% as a share of GDP respectively. We also look into the relationship between financial structure and the innovation-pollution nexus. We show that innovation promotes environmental quality in countries that have a relatively more equity-based financial system. Our empirical evidence calls for policymakers to identify the optimal level of finance to mitigate pollution resulting from innovative activities and realign the financial structure in accordance with the innovation-pollution nexus. Frontiers Media 2022 Article PeerReviewed Yu, Danni and Soh, Wei Ni and Amin Noordin, Bany Ariffin and Yahya, Mohamed Hisham and Latif, Badar (2022) The impact of innovation on CO2 emissions: the threshold effect of financial development. Frontiers in Environment Science, 10. pp. 1-31. ISSN 2296-665X https://www.frontiersin.org/articles/10.3389/fenvs.2022.980267/full 10.3389/fenvs.2022.980267
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
description We show that innovative activities exacerbate environmental degradation based on data covering 52 countries between 1990 and 2014. Yet, innovative activities carried out in countries with greater financial development pose less environmental harm. Additionally, we show the equity market is more effective concerning dampening effect of innovation on carbon emissions. With a dynamic panel threshold method, we find that innovation is significantly associated with improvements in environmental quality when the private sector credit and market capitalization of listed domestic companies exceed threshold levels of about 65 and 16% as a share of GDP respectively. We also look into the relationship between financial structure and the innovation-pollution nexus. We show that innovation promotes environmental quality in countries that have a relatively more equity-based financial system. Our empirical evidence calls for policymakers to identify the optimal level of finance to mitigate pollution resulting from innovative activities and realign the financial structure in accordance with the innovation-pollution nexus.
format Article
author Yu, Danni
Soh, Wei Ni
Amin Noordin, Bany Ariffin
Yahya, Mohamed Hisham
Latif, Badar
spellingShingle Yu, Danni
Soh, Wei Ni
Amin Noordin, Bany Ariffin
Yahya, Mohamed Hisham
Latif, Badar
The impact of innovation on CO2 emissions: the threshold effect of financial development
author_facet Yu, Danni
Soh, Wei Ni
Amin Noordin, Bany Ariffin
Yahya, Mohamed Hisham
Latif, Badar
author_sort Yu, Danni
title The impact of innovation on CO2 emissions: the threshold effect of financial development
title_short The impact of innovation on CO2 emissions: the threshold effect of financial development
title_full The impact of innovation on CO2 emissions: the threshold effect of financial development
title_fullStr The impact of innovation on CO2 emissions: the threshold effect of financial development
title_full_unstemmed The impact of innovation on CO2 emissions: the threshold effect of financial development
title_sort impact of innovation on co2 emissions: the threshold effect of financial development
publisher Frontiers Media
publishDate 2022
url http://psasir.upm.edu.my/id/eprint/103577/
https://www.frontiersin.org/articles/10.3389/fenvs.2022.980267/full
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score 13.211869

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