Research Information System
Sustainability (Switzerland), vol.17, no.12, 2025 (SCI-Expanded, SSCI, Scopus)
Greenhouse gas emissions are a major driver of global climate change, prompting increasing attention to the role of financial systems in supporting environmental sustainability. In this context, understanding how financial development influences emissions in emerging economies has become critically important. According to the findings of the long-term estimation, financial development has a direct negative impact on total greenhouse gas emissions and carbon dioxide emissions. Meanwhile, economic growth, trade openness, and population growth exert positive effects on these emissions. Although financial development negatively influences emissions, its interaction with economic growth and population dynamics is complex and may indirectly affect emissions through these factors. In addition, the error correction coefficient found for each country is negative and significant. The panel causality results indicate a unidirectional causal relationship between economic growth and total greenhouse gas emissions and carbon dioxide emissions. These findings are important for governments developing environmental policies, as they show how financial development can improve environmental impacts and help create sustainability-focused policies.