Financial Stability and CO₂ Emissions in High-Emission Asian Economies: A Nonlinear PMG-ARDL Analysis with Implications for Sustainable Competitiveness
Ping Sun, Tianying Jiang
Keywords:
Financial stability, CO₂ emissions, nonlinear PMG-ARDL, asymmetry, high-emission Asian economies, sustainable competitiveness
Abstract:
This study examines the effect of financial stability on carbon dioxide (CO₂) emissions in five high-emission Asian economies over the period 1992–2019. To capture possible asymmetries, the study applies pooled mean group autoregressive distributed lag (PMG-ARDL) and nonlinear PMG-ARDL estimators that distinguish between positive and negative changes in financial stability. Fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) are used to assess the robustness of the long-run estimates. The results show that, in the long run, a positive change in financial stability has no statistically significant effect on CO₂ emissions, whereas a negative change in financial stability is associated with lower emissions. This points to an asymmetric relationship. In the short run, neither positive nor negative changes in financial stability exert statistically significant effects. The FMOLS and DOLS estimates partly support the long-run asymmetric findings. These results suggest that the environmental implications of financial stability depend on the direction of financial change and that environmental objectives should be incorporated more explicitly into financial-sector policy in high-emission Asian economies. Such policy alignment can support lower-carbon development pathways and strengthen the foundations of sustainable competitiveness in the long run.
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 Financial Stability and CO₂ Emissions in High-Emission Asian Economies: A Nonlinear PMG-ARDL Analysis with Implications for Sustainable Competitiveness [PDF file] [Filesize: 376.78 KB]
 10.7441/joc.2026.SI.15
Sun, P., & Jiang, T. (2026). Financial Stability and CO₂ Emissions in High-Emission Asian Economies: A Nonlinear PMG-ARDL Analysis with Implications for Sustainable Competitiveness. Journal of Competitiveness, 18(SI 2), 158–170. https://doi.org/10.7441/joc.2026.SI.15
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