Dynamics of biodiversity loss and financial system stability nexus in developing countries

  • Received August 8, 2022;
    Accepted September 13, 2022;
    Published October 21, 2022
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/ee.13(1).2022.07
  • Article Info
    Volume 13 2022, Issue #1, pp. 79-88
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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.

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    • 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
    • Conceptualization
      Chinwe R. Okoyeuzu
    • Data curation
      Chinwe R. Okoyeuzu
    • Formal Analysis
      Chinwe R. Okoyeuzu
    • Investigation
      Chinwe R. Okoyeuzu
    • Methodology
      Chinwe R. Okoyeuzu
    • Visualization
      Chinwe R. Okoyeuzu, Wilfred I. Ukpere
    • Writing – original draft
      Chinwe R. Okoyeuzu
    • Funding acquisition
      Wilfred I. Ukpere
    • Project administration
      Wilfred I. Ukpere
    • Resources
      Wilfred I. Ukpere
    • Software
      Wilfred I. Ukpere
    • Supervision
      Wilfred I. Ukpere
    • Validation
      Wilfred I. Ukpere
    • Writing – review & editing
      Wilfred I. Ukpere