Green investments, financial development, and environmental quality in Ghana: evidence from the novel dynamic ARDL simulations approach

Mohammed Musah; Michael Owusu-Akomeah; Emmanuel Attah Kumah; Isaac Adjei Mensah; Joseph Dery Nyeadi; Muntasir Murshed; Morrison Alfred

doi:10.1007/s11356-021-17685-y

Green investments, financial development, and environmental quality in Ghana: evidence from the novel dynamic ARDL simulations approach

Environ Sci Pollut Res Int. 2022 May;29(21):31972-32001. doi: 10.1007/s11356-021-17685-y. Epub 2022 Jan 11.

Authors

Mohammed Musah¹, Michael Owusu-Akomeah², Emmanuel Attah Kumah², Isaac Adjei Mensah^{3

4}, Joseph Dery Nyeadi⁵, Muntasir Murshed⁶, Morrison Alfred⁷

Affiliations

¹ Department of Accounting, Banking and Finance, Faculty of IT Business, Ghana Communication Technology University, Accra, Ghana. prophe2013@yahoo.com.
² Department of Accounting, Banking and Finance, Faculty of IT Business, Ghana Communication Technology University, Accra, Ghana.
³ Institute of Applied Systems Analysis (IASA), School of Mathematics, Jiangsu University, Zhenjiang, People's Republic of China.
⁴ Department of Statistics and Actuarial Science, Kwame Nkrumah University of Science and Technology (KNUST), Kumasi, Ghana.
⁵ Department of Banking and Finance, S.D. Dombo University of Business and Integrated Development Studies, Wa, Ghana.
⁶ School of Business and Economics, North South University, Dhaka, 1229, Bangladesh.
⁷ Department of Accounting Studies Education, Akenten Appiah-Menka University of Skills Training and Entrepreneurial Development, Kumasi, Ghana.

PMID: 35013976
DOI: 10.1007/s11356-021-17685-y

Abstract

Numerous studies have examined the influence of macroeconomic factors on environmental quality in Ghana. However, to the best of our knowledge, there has been no study on the connection between green investments, financial development, and environmental quality in the context of this Sub-Saharan African country. This study was therefore conducted to help fill this gap using annual frequency time series data ranging from 1970 to 2018. In attaining the objectives of this study, robust econometric techniques were employed. From the results, all the variables were first differenced stationary and cointegrated in the long run. The dynamic ARDL simulations technique with the support of the ARDL estimator was employed to examine the elastic effects of the predictors on the response variable, and from the discoveries, green investments improved environmental quality in Ghana both in the long and the short run via carbon dioxide mitigations. However, in both the long and the short run, financial development and energy utilization had a detrimental influence on environmental quality due to their positive influence on carbon dioxide emissions. Moreover, the N-shaped association between national income and environmental pollution was validated for Ghana. On the causal directions amidst the variables, there was no causality between green investments and environmental degradation was evidenced; however, a bidirectional causality between financial development and environmental pollution was also discovered. Also, unidirectional causalities running from national income and energy consumption to environmental degradation were discovered. Based on the findings, the study recommend that investments in green sources should be intensified to help improve environmental quality in Ghana. Furthermore, improving developments in the financial sector is a vital means through which the country could attain its sustainable development goals.

Keywords: Dynamic ARDL simulations approach; Environmental quality; Financial development; Ghana; Green investments.

Publication types

Retracted Publication

MeSH terms

Carbon Dioxide* / analysis
Economic Development*
Environmental Pollution
Ghana
Investments

Substances

Carbon Dioxide