The Effect of Financial Development on CO2 Emissions in Iran

اقتصاد پولی مالی

Article 8, Volume 20, Issue 6, August 2013, Pages 147-170   

Document Type: پژوهشی

DOI: 10.22067/pm.v20i6.36361

Authors

Mahindokht Kazemi^* ; Mohammad Ali Falahi; Akram Zeynaliyan

Abstract

This study, using ARDL model, examines the relationship between carbon dioxide emissions and indicators of financial development with variables such as real per capita non-oil income, per capita energy consumption and ratio of import and export to GDP in Iran during the period 1352-1390.
The results show that long-run elasticity of carbon dioxide emissions with respect to real per capita income, per capita energy consumption and export in Iran are positive and with respect to import is negative. According to the results, the ratio of liquid liabilities to GDP and private sector debt to the banking system to GDP have positive and significant effect on carbon dioxide emissions in the long run, (0.257) and (0.304) and in the short run (0.175) and (0.233) in Iran respectively. In addition, the effect of the ratio of commercial bank domestic assets to central bank and total assets of banking system on CO2 emissions in Iran in the long run is non-significant and in the short run is estimated at 90% significance level and about (-0.205). The Causality test results show that there is a short run one-way causal relationship of the three indicators of financial development on emissions of carbon dioxide in Iran.

Keywords

Financial development; Environmental Kuznets Curve; CO2; Iran