Article Sidebar

Submitted
June 10, 2024
Accepted
March 26, 2025
Published
April 29, 2025
Download
Full text PDF
Statistic
Read Counter : 110 Download : 79

Downloads

Download data is not yet available.

Main Article Content

Abstract

Purpose — This study examines how economic growth, green finance, and renewable energy affect environmental quality (CO2 emissions) under the Environment Kuznets Curve (EKC) hypothesis framework.
Methods — This study uses data from ASEAN-6 developing countries, including Indonesia, Malaysia, Thailand, Vietnam, the Philippines, and Cambodia, from 2000 to 2020. It employs Panel Autoregressive Distributed Lag (ARDL), which is widely used for time series analysis since it can capture the short-run and long-run effects among variables.
Findings — The result shows the presence of the EKC Hypothesis in ASEAN developing countries. Green Finance and Renewable Energy reduce CO2 emissions only in the long run. In contrast, in the short run, Green Finance shows no effect in lowering CO2 Emissions due to initial costs, infrastructure challenges, market dynamics, and delayed policy implementation; the effect seems to increase in the long run as economies evolve, technologies mature, and awareness of environmental issues rises within emerging economies.
Implication — This study suggests that ASEAN developing countries should enhance their green finance efforts and expedite the transition to renewable energy by attracting additional investments in green finance and renewable energy transition. Governments in the Southeast Asian region must improve their policies and laws.
Originality — Revisiting the EKC hypothesis by including Green Finance within the ASEAN-6 emerging countries, which has been scarcely conducted in recent literature, this study contributes to the region's policymakers regarding green finance allocation and its relationship to environmental quality.

Keywords

EKC hypothesis Environmental quality CO2 Emission Green Finance Renewable Energy

Article Details

License

Copyright (c) 2025 Isnaini Nuzula Agustin, Rizky Adi Mahendra, Hesniati Hesniati

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).

Creative Commons License

Economic Journal of Emerging Markets by Center for Economic Studies, Universitas Islam Indonesia is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

How to Cite
Agustin, I. N., Mahendra, R. A., & Hesniati, H. (2025). How does Green Finance affect the environment in the ASEAN emerging countries?. Economic Journal of Emerging Markets, 17(1), 70–81. https://doi.org/10.20885/ejem.vol17.iss1.art6
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Adeel-Farooq, R. M., Raji, J. O., & Adeleye, B. N. (2020). Economic Growth and Methane Emission: Testing The EKC Hypothesis in ASEAN Economies. Management of Environmental Quality: An International Journal, 32(2), 277–289. https://doi.org/10.1108/MEQ-07-2020-0149
  2. Ahmed, N., Areche, F., Sheikh, A., & Lahiani, A. (2022). Green Finance and Green Energy Nexus in ASEAN Countries: A Bootstrap Panel Causality Test. Energies, 15(14), 5068. https://doi.org/10.3390/en15145068
  3. Ahmed, S., Abdi, A. H., Sodal, M., Yusuf, O. A., & Mohamud, M. H. (2025). Assessing the Energy-Economy-Environment Nexus in Somalia: The Impact of Agricultural Value Added on CO2 Emissions. International Journal of Energy Economics and Policy, 15(1), 221-232.
  4. Altaf, A., Anwar, M. A., Shahzad, U., & Bilan, Y. (2025). Exploring the Nexus among Green Finance, Renewable Energy, and Environmental Sustainability: Evidence from OECD Economies. Renewable Energy, 122589.
  5. Anwar, A., Siddique, M., Dogan, E., & Sharif, A. (2021). The Moderating Role of Renewable and Non-Renewable Energy in Environment-Income Nexus for ASEAN Countries: Evidence from Method of Moments Quantile Regression. Renewable Energy, 164, 956–967. https://doi.org/10.1016/j.renene.2020.09.128
  6. Bahmani-Oskooee, M., Akhtar, P., Ullah, S., & Majeed, M. T. (2020). Exchange Rate Risk and Uncertainty and Trade Flows: Asymmetric Evidence from Asia. Journal of Risk and Financial Management, 13(6), 128. https://doi.org/10.3390/jrfm13060128
  7. Baskaya, M. M., Samour, A., & Tursoy, T. (2022). The Financial Inclusion, Renewable Energy and CO2 Emissions Nexus in The BRICS Nations: New Evidence Based on The Method of Moments Quantile Regression. Applied Ecology and Environmental Research, 20(3), 2577–2595. https://doi.org/10.15666/aeer/2003_25772595
  8. Bhutta, A. I., Ullah, M. R., Sultan, J., Riaz, A., & Sheikh, M. F. (2022). Impact of Green Energy Production, Green Innovation, Financial Development on Environment Quality: A Role of Country Governance in Pakistan. International Journal of Energy Economics and Policy, 12(1), 316–326. https://doi.org/10.32479/ijeep.11986
  9. Candy, C., Robin, R., Sativa, E., Septiana, S., Can, H., & Alice, A. (2022). Fintech in the time of COVID-19: Conceptual Overview. Jurnal Akuntansi, Keuangan, Dan Manajemen, 3(3), 253-262.
  10. Chan, T. H., Saqib, A., & Nuzula, A. I. (2024). Assessing the Carbon Footprints of Income Growth, Green Finance, Institutional Quality and Renewable Energy Consumption in Emerging Asian Economies. Capital Markets Review, 32(1), 1-27.
  11. Claire, B., & Widyawati, D. (2023). Impact of Industrialization and Renewable Energy on Carbon Dioxide Emissions in 9 ASEAN Countries. Economic Journal of Emerging Markets, 15(2), 183–198. https://doi.org/10.20885/ejem.vol15.iss2.art6
  12. Dong, F., Wang, Y., Su, B., Hua, Y., & Zhang, Y. (2019). The Process of Peak CO2 Emissions in Developed Economies: A Perspective of Industrialization and Urbanization. Resources, Conservation and Recycling, 141, 61–75. https://doi.org/10.1016/j.resconrec.2018.10.010
  13. Dong, H., Xue, M., Xiao, Y., & Liu, Y. (2021). Do Carbon Emissions Impact The Health of Residents? Considering China’s Industrialization and Urbanization. Science of The Total Environment, 758, 143688. https://doi.org/10.1016/j.scitotenv.2020.143688
  14. Filonchyk, M., Peterson, M. P., Zhang, L., Hurynovich, V., & He, Y. (2024). Greenhouse gas emissions and global climate change: Examining the influence of CO2, CH4, and N2O. Science of The Total Environment, 935, 173359. https://doi.org/10.1016/j.scitotenv.2024.173359
  15. Grossman, G. M., & Krueger, A. B. (1995). Economic Growth and The Environment. The Quarterly Journal of Economics, 110(2), 353–377. https://doi.org/10.2307/2118443
  16. Guo, C.-Q., Wang, X., Cao, D.-D., & Hou, Y.-G. (2022). The Impact of Green Finance on Carbon Emission--Analysis Based on Mediation Effect and Spatial Effect. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.844988
  17. Guzel, A. E., & Okumus, İ. (2020). Revisiting The Pollution Haven Hypothesis in ASEAN-5 Countries: New Insights from Panel Data Analysis. Environmental Science and Pollution Research, 27(15), 18157–18167. https://doi.org/10.1007/s11356-020-08317-y
  18. Han, S., & Jun, H. (2023). Growth, emissions, and climate finance nexus for sustainable development: Revisiting the environmental Kuznets curve. Sustainable Development, 31(1), 510–527. https://doi.org/10.1002/sd.2406
  19. Hidranto, F. (2023). Dekarbonisasi Harga Mati. INDONESIA.GO.ID.
  20. Hu, J., Chen, H., Dinis, F., & Xiang, G. (2023). Nexus Among Green Finance, Technological Innovation, Green Fiscal Policy, and CO2 Emissions: A Conditional Process Analysis. Ecological Indicators, 154, 110706. https://doi.org/10.1016/j.ecolind.2023.110706
  21. Ibrahiem, D. M. (2020). Do Technological Innovations and Financial Development Improve Environmental Quality in Egypt? Environmental Science and Pollution Research, 27(10), 10869–10881. https://doi.org/10.1007/s11356-019-07585-7
  22. Johnson, D. L., Ambrose, S. H., Bassett, T. J., Bowen, M. L., Crummey, D. E., Isaacson, J. S., Johnson, D. N., Lamb, P., Saul, M., & Winter-Nelson, A. E. (1997). Meanings of Environmental Terms. Journal of Environmental Quality, 26(3), 581–589. https://doi.org/10.2134/jeq1997.00472425002600030002x
  23. Kassi, D. F., & Li, Y. (2025). Does green financing benefit the development of renewable energy capacities and environmental quality? Evidence from Chinese provinces. Renewable Energy, 122482.
  24. Khan, I., & Hou, F. (2021). Does Multilateral Environmental Diplomacy Improve Environmental Quality? The Case of The United States. Environmental Science and Pollution Research, 28(18), 23310–23322. https://doi.org/10.1007/s11356-020-12005-2
  25. Khan, S., Akbar, A., Nasim, I., Hedvičáková, M., & Bashir, F. (2022). Green Finance Development and Environmental Sustainability: A Panel Data Analysis. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.1039705
  26. Kuznets, S. (1955). Economic growth and income inequality. The American Economic Review, 45(1), 1–28. https://doi.org/10.2307/2118443
  27. Limanseto, H. (2023). Sebagai Salah Satu Titik Terang Pertumbuhan Ekonomi Global, ASEAN juga Tekankan Pentingnya Upaya Inklusif dan Kolaboratif dari Sektor Swasta. Kementerian Koordinator Bidang Perekonomian Republik Indonesia.
  28. Massagony, A., & Budiono. (2023). Is the Environmental Kuznets Curve (EKC) hypothesis valid on CO2 emissions in Indonesia? International Journal of Environmental Studies, 80(1), 20–31. https://doi.org/10.1080/00207233.2022.2029097
  29. Nguyen, T. K. O., Le, Q. T., Kanabkaew, T., Chitaporpan, S., & Le, T. N. H. (2020). Introduction to Environmental Management and Services. In TORUS 3 – Toward an Open Resource Using Services (pp. 1–16). Wiley. https://doi.org/10.1002/9781119720522.ch1
  30. Novia, J., & Candy, C. (2023). Pengaruh Green Investment Dalam Financial Performance: Efek Moderasi dari Environmental Policy. Widya Cipta: Jurnal Sekretari Dan Manajemen, 7(2), 65–73. https://doi.org/10.31294/widyacipta.v7i2.15567
  31. Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94(446), 621-634.
  32. Putri, A. M. H. (2023, September). Bursa Karbon, Ini Bukti Komitmen RI Pada Perubahan Iklim. CNBC Indonesia.
  33. Raghutla, C., & Kolati, Y. (2023). Does Renewable Energy Improve Environmental Quality? Evidence From RECAI Countries. Environmental Science and Pollution Research, 30(45), 100717–100730. https://doi.org/10.1007/s11356-023-29402-y
  34. Raza, S. A., & Shah, N. (2018). Testing Environmental Kuznets Curve Hypothesis in G7 Countries: The Role of Renewable Energy Consumption and Trade. Environmental Science and Pollution Research, 25(27), 26965–26977. https://doi.org/10.1007/s11356-018-2673-z
  35. Rehman, A., Ma, H., & Ozturk, I. (2021). Do Industrialization, Energy Importations, and Economic Progress Influence Carbon Emissions in Pakistan? Environmental Science and Pollution Research, 28(33), 45840–45852. https://doi.org/10.1007/s11356-021-13916-4
  36. Ridwan, M., Urbee, A. J., Voumik, L. C., Das, M. K., Rashid, M., & Esquivias, M. A. (2024). Investigating the environmental Kuznets curve hypothesis with urbanization, industrialization, and the service sector for six South Asian Countries: Fresh evidence from Driscoll-Kraay standard error. Research in Globalization, 8, 100223. https://doi.org/10.1016/j.resglo.2024.100223
  37. Sadiq, M., Chau, K. Y., Ha, N. T. T., Phan, T. T. H., Ngo, T. Q., & Huy, P. Q. (2024). The impact of green finance, eco-innovation, renewable energy, and carbon taxes on CO2 emissions in BRICS countries: Evidence from CS ARDL estimation. Geoscience Frontiers, 15(4), 101689. https://doi.org/10.1016/j.gsf.2023.101689
  38. Sohail, S., Ullah, S., & Javid, A. Y. (2022). Fiscal Decentralization, Institutional Quality, and Government Size: An Asymmetry Analysis for Asian Economies. Transnational Corporations Review, 14(3), 256–270. https://doi.org/10.1080/19186444.2021.1956855
  39. Tahir, T., Luni, T., Majeed, M. T., & Zafar, A. (2021). The Impact of Financial Development and Globalization on Environmental Quality: Evidence from South Asian Economies. Environmental Science and Pollution Research, 28(7), 8088–8101. https://doi.org/10.1007/s11356-020-11198-w
  40. Triki, R., Kahouli, B., Tissaoui, K., & Tlili, H. (2023). Assessing the Link between Environmental Quality, Green Finance, Health Expenditure, Renewable Energy, and Technology Innovation. Sustainability, 15(5), 4286. https://doi.org/10.3390/su15054286
  41. Usman, O., Iorember, P. T., Ozturk, I., & Bekun, F. V. (2022). Examining the Interaction Effect of Control of Corruption and Income Level on Environmental Quality in Africa. Sustainability, 14(18), 11391. https://doi.org/10.3390/su141811391
  42. Wang, H., Alfryyan, N., Al-Buriahi, M. S., Khan, Y. A., Alhomrani, M., Alamri, A. S., Azhar, M., & Abbas, S. Z. (2022). Dynamic Linkages Between Developing Economy and Environmental Pollution: An Autoregressive Distributed Lag Statistical Approach. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.939349
  43. Wang, J., & Azam, W. (2024). Natural resource scarcity, fossil fuel energy consumption, and total greenhouse gas emissions in the top-emitting countries. Geoscience Frontiers, 15(2), 101757. https://doi.org/10.1016/j.gsf.2023.101757
  44. Wang, J., & Ma, Y. (2022). How Does Green Finance Affect CO2 Emissions? Heterogeneous and Mediation Effects Analysis. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.931086
  45. Wei, S., Jiandong, W., & Saleem, H. (2023). The Impact of Renewable Energy Transition, Green Growth, Green Trade and Green Innovation on Environmental Quality: Evidence from Top 10 Green Future Countries. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.1076859
  46. World Bank. (2023). Metadata Glossary. The World Bank.
  47. Yadav, A., Gyamfi, B. A., Asongu, S. A., & Behera, D. K. (2024). The role of green finance and governance effectiveness in the impact of renewable energy investment on CO2 emissions in BRICS economies. Journal of Environmental Management, 358, 120906. https://doi.org/10.1016/j.jenvman.2024.120906
  48. Yang, M., & Tang, X. (2024). Investigating the asymmetric impact of tourism, green fiscal policy, and fintech on environmental emissions and coastal water quality: an empirical study using the method of moments quantile regression. Frontiers in Environmental Science, 12(January), 1–13. https://doi.org/10.3389/fenvs.2024.1499558
  49. Zafar, M. W., Saud, S., & Hou, F. (2019). The Impact of Globalization and Financial Development on Environmental Quality: Evidence from Selected Countries in The Organization for Economic Co-Operation and Development (OECD). Environmental Science and Pollution Research, 26(13), 13246–13262. https://doi.org/10.1007/s11356-019-04761-7
  50. Zhan, Y., Wang, Y., & Zhong, Y. (2023). Effects of Green Finance and Financial Innovation on Environmental Quality: New Empirical Evidence from China. Economic Research-Ekonomska Istraživanja, 36(3). https://doi.org/10.1080/1331677X.2022.2164034
  51. Zhang, Z., Linghu, Y., Meng, X., & Yi, H. (2023). Research on The Carbon Emission Reduction Effects of Green Finance in The Context of Environment Regulations. Economic Research-Ekonomska Istraživanja, 36(1). https://doi.org/10.1080/1331677X.2023.2179513
No Related Submission Found