Dynamics of biodiversity loss and financial system stability nexus in developing countries
-
Author(s)Chinwe R. OkoyeuzuLink to ORCID Index: https://orcid.org/0000-0003-1925-9875
,
Wilfred I. UkpereLink to ORCID Index: https://orcid.org/0000-0002-3308-0081
-
DOIhttp://dx.doi.org/10.21511/ee.13(1).2022.07
-
Article InfoVolume 13 2022, Issue #1, pp. 79-88
- Cited by
- 407 Views
-
62 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Global warming has been escalating along with its major damaging effects. One such effect is its negative impact on economic growth. This paper is premised on the fact that, in addition to its threats to economic growth, climate change can affect financial institutions unfavorably and become a significant cause of financial risk. Therefore, this study aims to investigate the nexus between the dynamics of biodiversity loss and financial system stability in sub-Saharan Africa (SSA). Using annualized data from World Bank indicators, the study adopted panel techniques. The panel data results indicate that carbon emission has no positive impact on bank non-performing loans in the short run. The findings strongly support that carbon emission in this region does not contribute significantly to financial instability in the short run. This shows that Africa may well be able to assist the world to counteract climate change by providing an essential carbon sink while resisting deforestation and effectively managing the continent’s marine resources. Based on the research findings, it is recommended that policymakers in SSA should promote economic activities that reduce climate fragility while ensuring sustainable economic development.
- Keywords
-
JEL Classification (Paper profile tab)C80, F64, F65
-
References38
-
Tables3
-
Figures1
-
- Figure 1. Carbon emissions and non-performing loans
-
- Table 1. Descriptive statistics
- Table 2. Summary of unit root test
- Table 3. Panel least square results
-
- Acar, S., & Lindmark, M. (2017). Convergence of CO2 emissions and economic growth in the OECD countries: Did the type of fuel matter? Energy Sources Part B: Econ Planning Policy, 12(7), 618-627.
- African Development Bank Group (AfDB Group). (2020). Drivers of Greenhouse Gas Emissions in Africa: Focus on agriculture, forestry and other land use.
- Arouri, M. E. H., Youssef, A. B., M’henni, H., & Rault, C. (2012). Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy Policy, 45, 342-349.
- Asteriou, D., & Hall, S. G. (2007). Applied Econometrics: A Modern Approach Using Eviews and Microfit. New York: Palgrave Macmillan.
- Batten, J. A., & Vo, X. V. (2016). Bank risk shifting and diversification in an emerging market. Risk Management, 18, 217-235.
- Bhat, J. A. (2018). Renewable and non-renewable energy consumption – impact on economic growth and CO2 emissions in five emerging market economies. Environmental Science and Pollution Research, 25, 35515-35530.
- Bhattacharya, A. (2022). The criticality of climate finance for Africa. Brookings.
- Bhattacharya, M., Churchill, S. A., & Paramati, S. R. (2017). The dynamic impact of renewable energy 34 and institutions on economic output and CO2 emissions across regions. Renewable Energy, 111(3), 157-167.
- Bordon, I., & Schmitz, B. (2015). Financial Stability as a Precondition for the Financing of Sustainable Development in Emerging and Developing Countries (Briefing Papers 23/2015). German Development Institute.
- Brooks, C. (2014). Introductory Econometrics for Finance. New York: Cambridge University Press.
- Charfeddine, L., & Kahia, M. (2019). Impact of renewable energy consumption and financial development on CO2 emissions and economic growth in the MENA region: A panel vector autoregressive (PVAR) analysis. Renewable Energy, 139, 198-213.
- Dafermos, Y., Nikolaidi, M., & Galanis, G. (2018). Climate Change, Financial Stability and Monetary Policy. Ecological Economics, 152, 219-234.
- Destek, M. A. (2017). Biomass energy consumption and economic growth: Evidence from top 10 biomass consumer countries. Energy Sources Part B: Econ Planning Policy, 12(10), 853-858.
- Gelzinis, G., & Steele, G. (2019). Climate Change Threatens the Stability of the Financial System. The Center for American Progress.
- International Monetary Fund (IMF). (2019). Fiscal Monitor: How to Mitigate Climate Changes. Washington: IMF.
- Işik, C., Kasımatı, E., & Ongan, S. (2017). Analyzing the causalities between economic growth, financial development, international trade, tourism expenditure and/or the CO2 emissions in Greece. Energy Sources Part B: Econ Planning Policy, 12(7), 665-673.
- Işık, C., Ongan, S., & Özdemir, D. (2019). Testing the EKC hypothesis for ten US states: An application of heterogeneous panel estimation method. Environmental Science and Pollution Research, 26(11), 10846-10853.
- Khan, M. K., Teng, J. Z., Khan, M. I., & Khan, M. O. (2019). Impact of globalization, economic factors and energy consumption on CO2 emission in Pakistan. Science of The Total Environment, 688, 424-436.
- Lagarde, C. (2020). Climate Change and the Financial Sector (Speech). The COP 26 Private Finance Agenda.
- Levin, A., & Lin, C. F. (1993). Unit Root Test in Panel Data: New Results (Discussion Paper No. 93-56). University of California at San Diego.
- Levin, A., Lin, C.-F., & Chu, C.-S. J. (2002). Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24.
- Li, B., & Wu, S. (2017). Effects of local and civil environmental regulation on green total factor productivity in China: A spatial Durbin econometric analysis. Journal of Cleaner Production, 153, 342-353.
- Lu, Z. N., Chen, H., Hao, Y., Wang, J., Song, X., & Mok, T. M. (2017). The dynamic relationship between environmental pollution, economic development and public health: Evidence from China. Journal of Cleaner Production, 166, 134-147.
- Magnan, A., Pörtner, H.-O., Duvat, V., Garschagen, M., Guinder, V. A., Zommers, Z., Hoegh-Guldberg, O., & Gattuso, J.-P. (2021). Estimating the global risk of anthropogenic climate change. Nature Climate Change, 11, 879-885.
- Malik, M. Y., Latif, K., Khan, Z., Butt, H. D., Hussain, M., & Nadeem, M. A. (2020). Symmetric and asymmetric impact of oil price, FDI and economic growth on carbon emission in Pakistan: Evidence from ARDL and non-linear ARDL approach. Science of the Total Environment, 726, 1-83.
- Muhammad, S., Long, X., Salman, M., & Dauda, L. (2020). Effect of urbanization and international trade on CO2 emissions across 65 belt and road initiative countries. Energy, 196, 117102.
- Munich Re. (2018). NatCatService – The natural catastrophe loss database.
- Network for the Greening Financial System (NGFS). (2019). A Call for Action: Climate Change as a Financial Risk.
- Owusu, P. A., Sarkodie, A. S., & Dubey, Sh. (2016). A review of renewable energy sources, sustainability issues and climate change mitigation. Cogent Engineering, 3(1), 1-14.
- Sadorsky, P. (2012). Correlations and volatility spillovers between oil prices and the stock prices of clean energy and technology companies. Energy Economics, 34(1), 248-255.
- Sarkodie, S. A., & Strezov, V. (2018). Assessment of contribution of Australia’s energy production to CO2 emissions and environmental degradation using statistical dynamic approach. Science of The Total Environment, 639, 888-899.
- Sevillano, J. S. M., & González, L. R. (2018). The Risk of Climate Change for Financial Markets and Institutions: Challenges, Measures Adopted and International Initiatives. Financial Stability Review, 34, 111-134.
- Shahbaz, M., & Sinha, A. (2019). Environmental Kuznets curve for CO2 emissions: A literature survey. Journal of Economic Studies, 46(1), 106-168.
- Shahbaz, M., Lean, H. H., & Shabbir, M. S. (2012). Environmental Kuznets curve hypothesis in Pakistan: Cointegration and Granger causality. Renewable and Sustainable Energy Reviews, 16(5), 2947-2953.
- Sida. (2019). Integrating Climate Action into National Development Planning – Coherent Implementation of the Paris Agreement and Agenda 2030. In A guide to support implementation of the Paris agreement.
- Sulaiman, C., & Abdul-Rahim, A. S. (2017). The relationship between CO2 emission, energy consumption and economic growth in Malaysia: A three-way linkage approach. Environmental Science and Pollution Research, 24(32), 25204-25220.
- United Nations (UN). (2015). Paris Agreement. Conference of Parties (COP 21) 12 December 2015.
- Usman, Z., & Landry, D. (2021). Economic Diversification in Africa: How and Why It Matters. Carnegie Endowment International Peace.
-
Exploring the environmental Kuznets curve for CO2 and SO2 for Southeast Asia in the 21st century context
Patrick Wijaya Tjoek , Pei-Ing Wu
doi: http://dx.doi.org/10.21511/ee.09(1).2018.01
Environmental Economics Volume 9, 2018 Issue #1 pp. 7-21 Views: 2617 Downloads: 415 TO CITE АНОТАЦІЯThis study aims to investigate the relationships between economic development and environmental degradation regarding the emissions of CO2 and SO2 in Southeast Asia (SEA). The pooling data consist of 10 countries, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, the Philippines, Thailand, and Vietnam, in the period 2003-2012. Furthermore, income elasticity of CO2 and SO2 emissions is computed for each country to observe the sensitivity of environmental degradation through the emissions of CO2 and SO2 brought by economic development.
The results indicate that CO2 displays an inverted U-shape pattern, whereas SO2 has decreased at an increasing rate since 2003. It is expected that SO2 will increase as the SEA economies further develop. The turning points for both CO2 and SO2, indicate that the current SEA income level has not reached the turning point. The income elasticities show that income elasticities for CO2 are positive for all 10 countries. Both Singapore and Malaysia are classified as countries with high income. However, Singapore, with 0.64%, has the highest income elasticity, and Malaysia, with 0.15%, has the second lowest. There is no indication that wealthy countries have a significant impact on CO2 through economic development. Income elasticities for SO2 of each country are all negative. This suggests that SO2 is an inferior good. Brunei, with 8.41%, has the most sensitivity toward change in SO2 emissions, whereas Myanmar, with only 0.58%, is the least sensitive to SO2 emissions. -
The impact of Working Capital Management on shareholders’ wealth and profitability: evidence from Colombo Stock Exchange
Wasantha Perera ,
Pradeep Priyashantha
doi: http://dx.doi.org/10.21511/imfi.15(2).2018.10
Investment Management and Financial Innovations Volume 15, 2018 Issue #2 pp. 104-115 Views: 2317 Downloads: 479 TO CITE АНОТАЦІЯThe Working Capital Management (WCM) has an important role for the firm’s success or failure, because it directly affects the overall business health of the firm. This study examined the impact of WCM on profitability and shareholders’ wealth using 50 companies listed in different sectors on the Colombo Stock Exchange (CSE) for the period from 2010 to 2015. This sample represents 47% of the selected sectors of CSE. The profitability of the company is measured using gross operating profit (GOP) and shareholders wealth measured by Tobin’s Q (TQ) ratio. The WCM is measured using five independent variables namely stock holding period (SHP), debtors’ collection period (DCP), creditors’ settlement period (CSP), cash conversion circle (CCC) and current assets ratio (CAR). Further, three additional variables such as firm size (SIZE), leverage (LEV) and earning yield (EY) are employed as controlling variables to capture the impact of other performance of the companies.
The data were analyzed using ordinary least square (OLS) and panel data regression models. These regression models reveal that there is a significant negative relationship between CCC and dependent variables (GOP & TQ). Further, this relationship has been confirmed by the major components of CCC such as SHP, DCP. Firm size also positively and significantly effects on the firm GOP while negatively effects on the TQ. Further, they revealed that there is a significant positive relationship between LEV and TQ. The study finds that the shareholders’ wealth and profitability can be increased through the efficiency of WCM. -
The nexus between foreign direct investment and environmental sustainability in North Africa
Environmental Economics Volume 9, 2018 Issue #1 pp. 57-68 Views: 2272 Downloads: 458 TO CITE АНОТАЦІЯThis paper provides a study of the relationship between sustainable development and foreign direct investment (FDI) from an empirical point of view in the case of the North African countries during the period from 1985 to 2005. We use the cointegration test, the FMOLS (Fully Modified Ordinary Least Squares) model and the Granger causality test to examine this relationship. According to the empirical results, we confirm the existence of a cointegration relationship between the different series studied in this paper. Based on the cointegration test we can use the error correction model. Also, to test the effect of FDI on sustainable development in the North African countries, we make an estimate by FMOLS method. We found that the foreign direct investment has a positive impact on CO2 emissions. Also, the Granger Causality test confirms the presence of a bidirectional relationship between FDI and CO2 emissions (Carbon dioxide). That is to say, the FDI can cause CO2 emissions and CO2 emissions can cause FDI based on the Granger causality.
