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Financial footsteps and carbon footprints: Analyzing the relationship between financial development and carbon inequality in China.

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Title: Financial footsteps and carbon footprints: Analyzing the relationship between financial development and carbon inequality in China.
Authors: Humayon M; Department of Resources and Environmental Economics, School of Economics, Beijing Institute of Technology, Beijing, China. Electronic address: mubashar.humayon@outlook.com., Shahbaz M; Department of Resources and Environmental Economics, School of Economics, Beijing Institute of Technology, Beijing, China; GUST Center for Sustainable Development (CSD), Gulf University for Science and Technology, Hawally, Kuwait; University of Economics and Human Science in Warsaw, Warsaw, Poland. Electronic address: muhdshahbaz77@gmail.com., Mamadiyarov Z; Department of Finance and Tourism, Termez, University of Economics and Service, Termez, Uzbekistan; Department of Finance, Alfraganus University, Tashkent, Uzbekistan; Department of Economics, Mamun University, Khiva, Uzbekistan. Electronic address: zokir_mamadiyarov@tues.uz.
Source: Journal of environmental management [J Environ Manage] 2025 Nov; Vol. 394, pp. 127556. Date of Electronic Publication: 2025 Oct 18.
Publication Type: Journal Article
Language: English
Journal Info: Publisher: Academic Press Country of Publication: England NLM ID: 0401664 Publication Model: Print-Electronic Cited Medium: Internet ISSN: 1095-8630 (Electronic) Linking ISSN: 03014797 NLM ISO Abbreviation: J Environ Manage Subsets: MEDLINE
Imprint Name(s): Original Publication: London ; New York, Academic Press.
MeSH Terms: Economic Development* , Carbon Footprint* , Carbon*, China ; Carbon Dioxide ; Climate Change
Abstract: Competing Interests: Declaration of competing interest There is no conflict of interest between the authors.
Achieving fair climate action requires addressing carbon disparity, but little is known about its causes, especially the role played by financial systems. According to this study, financial development could be a crucial tool for reducing this inequality. This study examines the effect of financial development on carbon inequality by considering CO 2 emissions, foreign direct investment, gross domestic product, and trade openness as additional determinants in carbon inequality function by utilizing time-sequential data of China for the period 1980 to 2022. We employed the Bootstrap Auto Regressive Distributed Lag (ARDL) bounds testing approach to examine the existence of cointegration among the variables. Our findings indicate that financial development lowers carbon inequality. Trade openness and foreign direct investment have a negative effect on carbon inequality. Contrarily, CO 2 emissions and gross domestic product enhance carbon inequality. Given the negative impact of trade openness, foreign direct investment, and financial development on carbon inequality, policymakers should focus on fostering inclusive economic systems, promoting sustainable foreign investment, and enhancing international and domestic regional trade agreements to sustain the negative impact of these determinants on carbon inequality. The positive impact of CO 2 emissions and gross domestic product on carbon inequality requires the establishment of economic growth policies that could mitigate the emission inequalities in the country.
(Copyright © 2025 Elsevier Ltd. All rights reserved.)
Contributed Indexing: Keywords: Carbon inequality; China; Financial development
Substance Nomenclature: 7440-44-0 (Carbon)
142M471B3J (Carbon Dioxide)
Entry Date(s): Date Created: 20251017 Date Completed: 20251108 Latest Revision: 20251108
Update Code: 20251108
DOI: 10.1016/j.jenvman.2025.127556
PMID: 41106346
Database: MEDLINE
Description
Abstract:Competing Interests: Declaration of competing interest There is no conflict of interest between the authors.<br />Achieving fair climate action requires addressing carbon disparity, but little is known about its causes, especially the role played by financial systems. According to this study, financial development could be a crucial tool for reducing this inequality. This study examines the effect of financial development on carbon inequality by considering CO <subscript>2</subscript> emissions, foreign direct investment, gross domestic product, and trade openness as additional determinants in carbon inequality function by utilizing time-sequential data of China for the period 1980 to 2022. We employed the Bootstrap Auto Regressive Distributed Lag (ARDL) bounds testing approach to examine the existence of cointegration among the variables. Our findings indicate that financial development lowers carbon inequality. Trade openness and foreign direct investment have a negative effect on carbon inequality. Contrarily, CO <subscript>2</subscript> emissions and gross domestic product enhance carbon inequality. Given the negative impact of trade openness, foreign direct investment, and financial development on carbon inequality, policymakers should focus on fostering inclusive economic systems, promoting sustainable foreign investment, and enhancing international and domestic regional trade agreements to sustain the negative impact of these determinants on carbon inequality. The positive impact of CO <subscript>2</subscript> emissions and gross domestic product on carbon inequality requires the establishment of economic growth policies that could mitigate the emission inequalities in the country.<br /> (Copyright © 2025 Elsevier Ltd. All rights reserved.)
ISSN:1095-8630
DOI:10.1016/j.jenvman.2025.127556