Financial Development and Population Growth as Drivers of Environmental Change: Evidence from South Asia

Abstract

This study examines the effects of financial development and population growth on environmental sustainability in South Asia. This region has a population density of over 400 people per square kilometer coupled with rapid economic growth leading to an increasing ecological footprint. For this study, panel data for the period 1980 to 2022 of South Asian countries was used. The descriptive study, regression analysis, and fixed effect model were used to analyze the data. The results show that there is a strong positive relation between financial development and ecological footprint, indicating that economic and financial growth contributes significantly towards environmental degradation. However, the relationship between ecological footprint and population density is negative but very weak, which suggests that increasing population density and urbanization that uses shared infrastructures may lead to a marginal reduction in ecological footprint.