Nexus between Economic Growth, Trade, Financial Development, Urbanization, and Environmental Degradation: Evidence from South Asian Countries

Abstract: This study examines the interrelationship between trade, economic growth, financial development, Urbanization, and environmental degradation in South Asian countries. Using the panel Autoregressive Distributive lag approach for 1990-2020, the empirical evidence demonstrated that economic growth and financial development increases the Co2 emissions (a measure of environmental degradation) and trade openness reduces the Co2 emissions in the long run. Similarly, in short run positive significant relationship was observed among economic growth and financial development, whereas urbanization negatively impacts the Co2 emissions and trade has insignificant relationship. Hence, these findings contributed to the literature by recommending that South Asian countries must strengthen and implement more stringent environmental regulations in which economic growth and its drivers will be encapsulated. Keywords: Economic Growth; Warranted Regulations, South Asian Countries, Carbon Emissions JEL Classification number: O4, P37, F51, Q3