Abstract:
Today, the growing environmental deprivation, along with amplified economic activity,
has resulted in a rise in the number of research examining this link. Financial
development has an impact on the environment. So, using a modified version of the
STIRPAT model using yearly data from 1976 to 2021, the study examines the
connection between financial sector expansion and CO2 emissions in Pakistan. The
ARDL bounds testing technique is used in the study to assess the long and short run
findings. The empirical conclusion shows that financial development, energy use, and
GDP all have a positive and substantial association by CO2 emissions. But trade is
inversely with the country's CO2 emissions. The population has a negligible and inverse
association by CO2 emissions. So the study provides a useful policy for regulating the
increase in carbon emissions in Pakistan.
