The carbon disclosure due to the growth economy, inward FDI, financial development: Do governance quality matter?

Abstract

As air pollution continues to rise worldwide, it's clear that immediate and collective action is essential. Dealing with air pollution is not just an environmental concern; it's a critical step to ensure a sustainable future. This study attempts to investigate the effect of FDI inflow, Growth, financial development, governance quality on carbon emissions (CO2), using a sample of ASEAN-5 countries over 1966 - 2022. including (VietNam, Thailand, Philippines, Malaysia, Indonesia) considering three dimensions: Overall financial development (OFD); Financial institutions (FI) and Financial Market (FM). By applying a System Generalized Methods of Moment (SGMM) estimator to deal with endogeneity, the results are shown to be statistically robust. Our main findings are that the emergence of a U-shaped Environmental Kuznets Curve (EKC) and a noteworthy correlation with the financial development, which is the banking sector, has a big impact on how much carbon gets released. Moreover, our empirical evidence strongly supports the Pollution Haven Hypothesis (PHH), indicating that Foreign Direct Investment (FDI) has a positive impact on carbon emissions (CO2). The result checked for robustness by six different indicators of quality governance. Based on these findings, the governments of ASEAN-5 countries should principally focus on what crucial policy to curb carbon emissions.