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ORIGINAL RESEARCH article
Front. Environ. Sci.
Sec. Environmental Economics and Management
Volume 13 - 2025 | doi: 10.3389/fenvs.2025.1555143
This article is part of the Research Topic Advancing Carbon Reduction and Pollution Control Policies Management: Theoretical, Application, and Future Impacts View all 28 articles
The nonlinear effect of financial openness on carbon emission intensity--evidence from 144 countries
Provisionally accepted- 1 School of Mathematics and Statistics, Zhaoqing University, Zhaoqing, China
- 2 Southern Ocean Science and Engineering Guangdong Laboratory (Zhuhai), Zhuhai, Guangdong Province, China
- 3 Business School, Nanfang College of Sun Yat-sen University, Guangzhou, Guangdong Province, China
This paper explores the relationship between financial globalization and climate change, focusing on how financial openness impacts carbon emission intensity. Given the growing importance of both financial globalization and the global challenge of climate change, the study aims to understand how countries can balance financial openness with sustainable development strategies. Using annual panel data from 144 countries between 2000 and 2011, the paper employs two-way fixed-effects and mediation models to analyze the effects.The key findings are as follows:There is an inverted U-shaped nonlinear relationship between financial openness and carbon emission intensity. Initially, low levels of financial openness attract foreign capital into fossil fuel-based industrial projects, increasing carbon emissions. However, beyond a certain threshold, higher financial openness shifts foreign investment toward renewable energy, leading to a reduction in emission intensity.Financial globalization influences carbon emission intensity through its impact on energy efficiency and the share of renewable energy, as well as by fostering technological advancements, with the relationship also exhibiting an inverted U-shape.Financial openness not only affects a country's own emissions but also creates a nonlinear spatial spillover effect on neighboring countries' emission intensity-initially promoting and later inhibiting carbon emissions.These findings suggest that financial globalization, if managed strategically, can contribute to both economic growth and environmental sustainability, highlighting the potential for policy interventions that encourage clean energy investment and technological innovation.
Keywords: Financial Openness, Carbon emission intensity, Inverse U-Shaped relationship, Renewable energy usage, Cross-country analysis
Received: 03 Jan 2025; Accepted: 27 Feb 2025.
Copyright: © 2025 Zhang, Ding and Li. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence:
Jing Li, Business School, Nanfang College of Sun Yat-sen University, Guangzhou, 510970, Guangdong Province, China
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