The Environmental Effects of Financial Market Development in East Asian and Southeast Asian Countries

Abstract

This study aims to examine the effect of financial market development, investment, and trade openness on the environmental quality of East Asian and Southeast Asian countries from 1991-2017. Differences in the influence of the East and Southeast Asian region on environmental quality indicators are accommodated by using the dummy variable of the region. All data is sourced from World Development Indicators - World Bank. The results of this study reinforce the notion that per capita income (GDPCap), the environmental effects of financial market development (FMDev), Foreign Direct Investment (FDI), trade openness (TL), influence according to the hypothesis. The Empirical Kuznets Curve (EKC) hypothesis was empirically proven in both regions. Capital inflows and trade openness negatively affect environmental quality, while financial market development (FMDev) has a positive effect on environmental quality in both regions.