Globalization, financial development and economic growth: perils on the environmental sustainability of an emerging economy.

Abstract

The study examines the effects of globalization, financial development, economic growth, and energy consumption on environmental sustainability in India over the period 1980–2015. The novelty of the study is the assessment of environmental sustainability in a single framework encompassing globalization, financial development, and growth effects. Findings reveal that an increased level of globalization and financial development while improving economic performance are inimical to the sustainability of the environment. In the short-run, globalization, economic growth, and increased energy consumption are contributing directly to environmental degradation, while banking sector development is impacting environmental sustainability adversely through the economic growth channel. Given the severity of the findings amidst India’s tryst with economic growth, proactive policies are warranted to encourage adaptation of greener and cleaner technologies in environmentally sustainable areas. This necessitates improved institutional quality encompassing stringent environmental standards, legal systems, property rights, corruption, financial information quality, etc., alongside the provision of incentives and subsidies to manufacturing firms undertaking technological innovations and complying with the environmental standards.