The impact of financial development on environmental quality: evidence from Malaysia

This paper examined the impacts of financial development on environmental quality in Malaysia, using the sum of financial access, depth, and efficiency as auxiliary variables for financial development from 1987 to 2020. The autoregressive distributed lag method was used to examine whether a level relationship (long run) existed among the variables. The paper found a long-run relationship among the variables. Financial development, population growth, economic growth, and energy usage positively significantly contribute to environmental degradation in both the short and long run, while squared economic growth significantly enhanced environmental quality in both the short and long run. Hence, environmental carbon Kuznets curve (ECKC) hold in Malaysia.