How Does Environmental Degradation React to Stock Market Development in Developing Countries?

Topcu M., Tuğcu C. T., Öcal O.

in: Econometrics of Green Energy Handbook: Economic and Technological Development, Muhammad Shahbaz,Daniel Balsalobre-Lorente, Editor, Springer, London/Berlin , Lausanne, pp.291-301, 2020

  • Publication Type: Book Chapter / Chapter Research Book
  • Publication Date: 2020
  • Publisher: Springer, London/Berlin 
  • City: Lausanne
  • Page Numbers: pp.291-301
  • Editors: Muhammad Shahbaz,Daniel Balsalobre-Lorente, Editor
  • Kayseri University Affiliated: Yes



As capital markets develop, the issue of whether this development improves the environmental quality rises very rapidly. Although not very documented, the literature has reached a consensus on the positive role of stock market development on carbon emissions in developing countries. Previous studies, however, do not include great number of countries to reach a broad consensus and assume that the effect does not change over time. Given these motivations, this study examines the impact of stock market development on carbon emissions in a panel of 60 developing countries over the period 1990–2014. Findings reveal that stock market development decreases environmental degradation in the short-run, whereas further development leads to environmental degradation in the long-run. Policy implications depending on these results are also discussed.