Impact of Globalization, Financial Development, Economic Growth, and Energy Usage on the Environmental Quality of Shanghai Cooperation Organization (SCO) Countries over the Period 1990–2019

This research study assessed the impact of globalization (G.I), financial development (F.D.), economic growth (GDP), and energy use (E.U.) on the environmental quality for a panel of the Shanghai cooperation organization (SCO) countries for 1990-2021. The study employed Breusch-Pagan-Lagrange multiplier, Pesaran-scaled Lagrange multiplier, bias-corrected-scaled Lagrange multiplier, Pesaran cross-sectional dependence tests and Dumitrescu and Hurlin Causality test. The second-generation test was used to assess the stationarity level of the variables. The Kao panel co-integration test confirms the variables' co-integration. Full-modified ordinary least square (FM-OLS) are used for long-run association. According to the study finding, financial growth (GDP) and CO2 emissions have a positive relationship, while globalization has an inverse relationship with CO2 emissions. The listed countries should keep a close eye on loan disbursement for green financing and environmentally friendly technologies that enhance environmental quality. Financial development and economic growth should not weaken the environmental quality or threaten sustainability. Furthermore, the Dumitrescu-Hurlin (D.H.) panel causality test result revealed the existence of bidirectional causality between financial development, economic growth, energy usage, and globalization with environmental quality. Moreover, the member countries of the Shanghai cooperation organization must promote Globalization to encourage the flow of green technologies to enhance environmental quality.