Validity of the environmental Kuznets Curve in Bangladesh under the role of financial development

Abstract

This paper examines the EKC hypothesis for Bangladesh between 1974 and 2018. Using the ARDL model of bound testing method, we found the evidence of the long-term association between per capita CO2 emissions, per capita GDP, consumption of energy and financial development. Moreover, the results show that the EKC hypothesis holds true for Bangladesh during the study period. Furthermore, the coefficient of financial development is positive and significant, which suggests that financial development in Bangladesh comes at the cost of environmental degradation. Therefore, policies should be taken which will foster financial institutes for investing more in energy efficient and green energy projects or environmentally sustainable low carbon projects which are not pollution intensive.

Keywords

• ekc
• financial development
• co2 emissions
• ardl