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Quality & Quantity
Published in: Quality & Quantity 6/2019

07-06-2019

Modelling the relationship between financing by Islamic banking system and environmental quality: evidence from bootstrap autoregressive distributive lag with Fourier terms

Author: Sakiru Adebola Solarin

Published in: Quality & Quantity | Issue 6/2019

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Abstract

The aim of the paper is to contribute to the extant empirical literature on the determinants of pollution by investigating the impact of financing by Islamic banking on a comprehensive index of emission in Malaysia. Using the stochastic environmental impact, population, affluence and technology (STIRPAT) framework, we controlled for the impact of industrial production index and demography. A residual augmented least squares (RALS) method is used to examine stationarity of the series. We have also used a recently proposed bootstrap autoregressive distributive lag (ARDL) test, which is further augmented with Fourier terms to cater for any nonlinearity in the estimation. The results show evidence for cointegration among the series. The long run estimates suggest that financing by Islamic banks has a negative impact on emission, while labour force increases it. The industrial production index does not have significant impact on emission. The policy implications and recommendations are discussed in the body of the paper.
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Appendix
Available only for authorised users
Footnotes
1
Some of the papers have conducted causality tests and have also tested for the existence of Environmental Kuznets Curve (EKC), but we have not reported them in this paper since they are not central to our focus.
 
2
The Department of the Environment is in the process of reviewing its method of computing the API in order to include small but hurtful PM2.5 particles in the air, ensuring that the Index is consistent with Guidelines of World Health Organisation.
 
3
The website for the Malaysia's Open Data Portal is http://​www.​data.​gov.​my/​. We have used the air pollution at 5:00 pm because there is availability of consistent data for the 5:00 pm figures and also the air pollution read at that point will capture aftermath of the day’s working activities.
 
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Metadata
Title
Modelling the relationship between financing by Islamic banking system and environmental quality: evidence from bootstrap autoregressive distributive lag with Fourier terms
Author
Sakiru Adebola Solarin
Publication date
07-06-2019
Publisher
Springer Netherlands
Published in
Quality & Quantity / Issue 6/2019
Print ISSN: 0033-5177
Electronic ISSN: 1573-7845
DOI
https://doi.org/10.1007/s11135-019-00904-7

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