Does Higher Economic and Financial Development Lead to Environmental Degradation : Evidence from BRIC Countries

The paper investigates the linkage between economic and financial development and decline in environmental quality in BRIC economies for the period 1992 – 2004. As measure of robustness, we also introduce and examine behavior of results considering USA and Japan. We employ feasible general least squares (FGLS) procedure to estimate the environmental impact of economic and financial development. In the process, our analysis fulfills the econometric criticism of the Environmental Kuznets Curve highlighted by Stern (2004). Our findings confirms the existence EKC as the results show that economic development decreases the environmental degradation with higher levels of economic growth. The results also reveal that financial development is an essential factor to decrease the CO2 per capita emissions