Financial Development, Economic Growth and Environmental Degradation in Selected Sub-Saharan African Countries

This study examines the relative effects of financial development and economic growth on environmental degradation in selected Sub-Saharan African (SSA) countries that includes Cote d’ivoire, Ghana, Kenya, Mauritius, Namibia, Nigeria and South Africa. Specifically, the study considered the roles of different financial system development factors on the environment, while also examining the impacts of economic growth on the environment using the environmental Kuznets curve (EKC) formulation. The study also examined the possible direction of causality between environment degradation and both economic growth and financial development among the countries, as well as the influence of financial development on the relationship between economic growth and environmental degradation. Environmental degradation is measured by the tonnes of carbon emission per country and the rate of ecological footprint which was further divided into per capita footprint on cropland and per capital footprint on built land. Financial system development is measured using both the
money and capital markets variables which include credit to the private sector, liquidity in the economy, market capitalization, and stock market turnover. A panel data of seven (7) selected SSA nations for the period of 1990 to 2021 is employed in the analysis, while the Mean Group (MG) and the Pooled Mean Group (PMG) techniques are employed to estimate the long-run and short-run relationship amongst the variables for the panel analysis.