The symmetrical and asymmetrical effects of foreign direct investment and financial development on carbon emission: evidence from Nigeria

This study aimed at investigating the symmetric and asymmetric effects of financial development, foreign direct investment (FDI), energy consumption, and economic growth on carbon emissions (CO2) towards environmental sustainability in Nigeria. A yearly data spanning from 1981 to 2016 was utilized with linear ARDL and non-linear ARDL techniques. The findings from the estimations show that FDI, and energy consumption have a long-run linear relationship with CO2 in Nigeria. In addition, FDI has a linear relationship with CO2 in the short-run. Interestingly, the positive and negative shocks in FDI have a significant long-run relationship with CO2, while only positive shock in financial development has a long-run relationship with CO2. The asymmetric effect in the short-run from the estimation shows that the positive and negative shocks in both financial development and FDI have a short-run relationship with CO2. Thus, this study argues for the integration of nationwide social awareness programs in the environmental policies and the implementation of financial credit policy that will address environmental degradation in Nigeria.