Energy Use, Financial Development and Pollution in Selected African Countries

Abstract

The consequences of environmental pollution on human life have continued to exacerbate in recent times, especially in African countries. This has spurred research interest among researchers to find out how nations can keep carbon emissions in check. In this regard, this study focuses on some selected African countries between 1981 and 2019 to investigate the effect of energy use, financial development and carbon emission. The study employs the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) based on the framework of the co-integration regression method to analyze the panel data. The result reveals that energy use positively and significantly affects carbon emissions in energy-dependent African countries. Financial development positively affects carbon emissions, while the mediating role of financial development between energy use and carbon emission causes carbon emissions to reduce. Therefore, the study recommends that energy-dependent African countries strengthen their financial sector to ensure credit availability for green supportive investment.