The Effect of Financial Sector Development on Carbon Emission in Thailand

Abstract

Economic development typically faced many hurdles, like policymakers do not focus on the potential factors which create hurdles in economic development. One of the problems of economic development is climate change, which directly caused global warming. Climate change and global warming occurred due to human induced greenhouse gas production and the use of fossil fuel (manufacturing and industrial process) which produce a massive amount of carbon emission gas. Furthermore, climate change has many side effects like the rapid loss of glaciers, rising sea levels, severe heat waves, etc. Thailand is the land of tropical beaches but even the temperature increased to a certain high level in summer due to the effect of climate change. According to the intergovernmental panel report, the sea level increased over time due to climate change which is almost the average of 1.8 mm per year. So, this situation is unpredictable and the arid zone of this country is now facing the severity of droughts with increased frequency. So, the objective of this study is to examine the long run association between carbon emission, energy consumption, and financial development in Thailand. This study used the timer series data from 1980 to 2018 which is taken from (World Bank, 2020). The autoregressive distributed lag (ARDL) model was used to examine that long run relationship and the results indicate that there exists a uni-directional and long run relationship among financial development and carbon dioxide. So, policymakers highlight the issue of global warming and serious action against the excessive use of carbon emission because it is a serious obstacle to human wellbeing which results in an unproductive capacity of the employee. Furthermore, the government needs to establish policies that help companies to adopt environmentally-friendly equipment’s which produce less carbon emission.