Carbon dioxide emissions, financial development and political institutions

Dong Hyeon Kim, Yi Chen Wu, Shu Chin Lin

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)


The paper empirically examines whether and how political institutions shape the nexus between finance and carbon dioxide (CO2) emissions. In a sample of developing and developed countries, it finds that financial development impedes green technology development and thus raises energy use and CO2 emissions, the effects that moderate with improvements in institutional quality. Despite so, there are differences between banks and stock markets, banking competition and concentration, and household and firm credit. Specifically, a more concentrated, less competitive bank-based financial system that lends more to households hinders green technology development and exaggerates energy use and CO2 emissions, and the impacts diminish when institutional quality enhances. Conversely, a more market-oriented financial system with a more competitive and less concentrated banking sector that lends more to private non-financial enterprises promotes green technology development and decreases energy use and CO2 emissions, the effects that weaken when the quality of political institutions betters.

Original languageEnglish
JournalEconomic Change and Restructuring
Publication statusAccepted/In press - 2021

Bibliographical note

Funding Information:
We are grateful to the editor G. Hondroyiannis and two anonymous referees for their constructive comments and suggestions that significantly improve the quality of our paper. This work was supported by a Korea University Grant. The usual disclaimer applies.

Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.


  • Bank market power
  • CO emissions
  • Financial development
  • Financial structure
  • Political institutions

ASJC Scopus subject areas

  • Economics and Econometrics


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