Will the development of the financial industry cause environmental pollution?
Management of Environmental Quality
ISSN: 1477-7835
Article publication date: 29 July 2021
Issue publication date: 5 October 2021
Abstract
Purpose
A series of environmental pollution issues and economic improvement go hand in hand. Since financial listed companies contribute significantly to the national economic development, China has been paying increasing attention to the development of the financial industry. The purpose of this paper is to explore the relationship among the development level of the financial industry, over-investment of the listed companies and environmental pollution through a macro-level and micro-level mechanism.
Design/methodology/approach
In this study, we adopt the 2011–2017 panel data of listed companies in the manufacturing industry to study the impacts of the financial industry on environmental pollution. Meanwhile, the paper uses a mediator model, and over-investment is introduced to the econometric model as a mediator to explore whether the development of the financial industry can affect the environmental pollution through over-investment.
Findings
A U-shaped relationship between financial industry development and environmental pollution was observed through a macro-perspective; additionally, over-investment of the listed companies significantly increased environmental pollution, along with a significant mediator effect of over-investment. A significant positive correlation was observed between financial industry development and environmental pollution in the East region of China, while the correlation was negative in the Central and West regions. The mitigation effect of financial industry development on environmental pollution was more significant in the low-end manufacturing industry, compared with basic and high-end manufacturing industries.
Originality/value
Strengthening the incentives and supervision toward company managers, reducing over-investment behaviors, encouraging suitable financial industry development to reduce financial risks, improving environmental conservation laws and regulations, and implementing stringent penalty mechanisms for environmental conservation are necessary.
Keywords
Acknowledgements
Authors' contributions: Lu Xing is in charge of the Introduction Section. Xiaojing Yi makes the conclusions and submit the article, and Ying Zhang provides the empirical results of the article. The author of this paper is equally contributed and sorted by the alphabetical order of surname.
Data availability: The data used during the current study are available from the corresponding author on reasonable request.
Ethical approval: Ethical approval was obtained from the National Natural Science Foundation of China.
Consent to participate: All authors of the article consent to participate.
Conflict of interest: The authors declare that they have no conflict of interest.
Citation
Xing, L., Yi, X. and Zhang, Y. (2021), "Will the development of the financial industry cause environmental pollution?", Management of Environmental Quality, Vol. 32 No. 6, pp. 1298-1316. https://doi.org/10.1108/MEQ-05-2021-0094
Publisher
:Emerald Publishing Limited
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