Akademik Veri Yönetim Sistemi
Transylvanian Review of Administrative Sciences, cilt.2023, sa.69, ss.5-24, 2023 (SSCI)
Financial deepening has increased in recent decades in CEE countries that have transitioned from a centrally planned economy to a market economy. However, its impact on carbon emissions is controversial. Although the determinants of emissions have been frequently examined in line with the EU’s goal of net zero carbon emissions, the empirical literature on the effects of financial deepening is insufficient. In that context, this study aims to investigate the impact of financial depth on the level of carbon emissions in CEE counties. A panel threshold regression model was carried out for a set of 11 countries, from 1995 to 2018. The main findings confirmed the existence of a double threshold effect. While in the low financial depth regime, financial deepening increases carbon emissions, in the medium regime it reduces them. In the high regime, however, no statistically significant effects were observed regarding the effects of the financial deepening. Moreover, emissions are reduced with taxes. None of the countries in the sample has financial depth index value between threshold values, according to the last three years’ averages. The findings argue that financial deepening will not be an adequate solution to reducing emissions and point to the importance of public tax policies.