Impact of banking sector development and environment on population health: evidence from EU transition countries

Abstract

This study explores the short and long-run effects of banking sector development and the environment on population health in EU member transition states through second-generation panel cointegration and causality analyses. The causality analysis revealed a significant causality between banking sector development and population health, but the causality direction varied depending on the indicator of banking sector development. Also, a one-way causality from greenhouse gas emissions per capita to population health was revealed. Furthermore, the cointegration analysis revealed that banking sector development had a very weak positive influence on population health in Bulgaria, Croatia, Estonia, Romania, Slovakia, and Slovenia, but had a very weak negative influence on population health in Hungary, Latvia, Lithuania, Poland. On the other hand, greenhouse gas emissions per capita had a negative effect on population health in Bulgaria, Croatia, Lithuania, and Romania. Lastly, real GDP per capita had a very weak positive influence on population health in Czech Republic, Hungary, Latvia, Lithuania, and Slovenia. Measures against environmental degradation need to be adopted to improve population health. Since the consumption of fossil fuels is the primary source of CO2 emissions, policymakers should find proper policy tools for reducing emissions by finding the right balance between costs and benefits.