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<p>Developing economies face unprecedented challenges from the effects of climate change. Crucially, financial systems can either mitigate or exacerbate environmental degradation. Despite extensive research on the finance-sustainability nexus, no consensus has emerged in the literature, especially in African contexts where existing studies have not adequately accounted for structural breaks and asymmetric effects. This study investigates symmetric and asymmetric relationships between financial development and carbon dioxide emissions in Morocco from 1990 to 2019, while controlling for the effects of renewable energy share, economic growth, industrial value added, green finance, non-renewable energy consumption, and population size. The study employs the Fourier ARDL (FARDL) model to account for structural breaks and the Non-linear ARDL (NARDL) model to capture asymmetries. FARDL model results reveal that financial development increases carbon emissions in the long run, while the effect of renewable energy share is insignificant. NARDL model results indicate asymmetric effects: positive changes in financial development (renewable energy share) increase (have no significant impact on) carbon emissions, while negative changes in both financial development and renewable energy share are associated with even larger emission increases. Regarding the other control variables, the long-run environmental effects of green finance and industrial value added are asymmetric, while economic growth, non-renewable energy consumption, and population size exhibit symmetric impacts. Given these findings, this study offers specific, evidence-based, and actionable policy recommendations, such as implementing mandatory environmental conditionality in financial sector credit allocation, accelerating coal phase-out and high-rate renewable energy deployment, scaling green finance with counter-cyclical mechanisms and institutional capacity, and introducing carbon pricing with revenue recycling for industrial decarbonization.</p> Graphical abstract <p></p>

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Financial development and climate change in Morocco: symmetric and asymmetric environmental effects

  • 期刊论文

  • 发表日期：

    2025年11月14日

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  • Remy Jonkam Oben,
  • Rabiu Abubakar,
  • Mehdi Seraj,
  • Şerife Zihni Eyüpoğlu,
  • Fezile Özdamlı

摘要

Developing economies face unprecedented challenges from the effects of climate change. Crucially, financial systems can either mitigate or exacerbate environmental degradation. Despite extensive research on the finance-sustainability nexus, no consensus has emerged in the literature, especially in African contexts where existing studies have not adequately accounted for structural breaks and asymmetric effects. This study investigates symmetric and asymmetric relationships between financial development and carbon dioxide emissions in Morocco from 1990 to 2019, while controlling for the effects of renewable energy share, economic growth, industrial value added, green finance, non-renewable energy consumption, and population size. The study employs the Fourier ARDL (FARDL) model to account for structural breaks and the Non-linear ARDL (NARDL) model to capture asymmetries. FARDL model results reveal that financial development increases carbon emissions in the long run, while the effect of renewable energy share is insignificant. NARDL model results indicate asymmetric effects: positive changes in financial development (renewable energy share) increase (have no significant impact on) carbon emissions, while negative changes in both financial development and renewable energy share are associated with even larger emission increases. Regarding the other control variables, the long-run environmental effects of green finance and industrial value added are asymmetric, while economic growth, non-renewable energy consumption, and population size exhibit symmetric impacts. Given these findings, this study offers specific, evidence-based, and actionable policy recommendations, such as implementing mandatory environmental conditionality in financial sector credit allocation, accelerating coal phase-out and high-rate renewable energy deployment, scaling green finance with counter-cyclical mechanisms and institutional capacity, and introducing carbon pricing with revenue recycling for industrial decarbonization.

Graphical abstract