Impact of financial development and energy consumption on environmental degradation in 184 countries using a dynamic panel model.

This study aimed to examine the impact of financial development and energy consumption on CO2 emissions by employing balanced panel data from the period 1990-2017 for 184 countries worldwide. This study applied seemingly unrelated regression (SUR), two-step difference, and the system GMM model for data analysis. The examined results of SUR, two-step difference, and system GMM show that energy consumption positively impacts the CO2 emissions worldwide; on the other hand, the examined results of two-step difference and the system GMM model indicate that financial development helps to reduce the CO2 emissions and the results of SUR indicate that financial development positively impacts the CO2 emissions. The examined results regarding economic growth indicate a positive effect on the CO2 emission and the square of economic growth verifies the validly of the environmental Kuznets curve in 184 countries. This study has significant implications for policy makers with regard to environment improvement, clean energy conservation, and an efficient financial system. Further directions are suggested based on the examined results.