Remittances, Financial Development, and Environment Quality: Evidence from South Asia

Abstract

Remittances inflow and financial development not only the important determinant of economic growth but also the polluting factor of environment in South Asian countries. This study is carried out to find out the impact of remittances and financial development (FD) on the environment pollution for the panel data over 1984 to 2018 by using panel OLS, fixed effect (FE) model, FMOLS and Pedronic co-integration test. The findings of co-integration test confirms the presence of long run association between the variables. Remittances, FD, energy consumption and FDI lead to environmental degradation while trade is the improving factor of environmental quality. The governments of South Asian countries should discourse the conflicting effect of remittances on environmental quality through severe limitations on highly polluted industries by strict financial procedures.