Banking-Based Financial Development and Fossil Energy-Based Environmental Impacts in Türkiye: ARDL Bounds Test Findings
Banking-Based Financial Development and Fossil Energy-Based Environmental Impacts in Türkiye
DOI:
https://doi.org/10.5281/zenodo.18089398Keywords:
Sustainable Finance, Green Banking, Financial Development, Fossil Energy, FEVEAbstract
Purpose – The aim of this study is to examine the impact of banking sector-based financial development on environmental pressures in Türkiye.
Design/data/methodology – The study used monthly data from 2015:01 to 2025:07. The Fossil Energy Environmental Impact (FEVE) index was created, derived from fossil fuel electricity production, fuel sales, and natural gas consumption. FEVE combines the carbon-intensive components of energy supply security and final consumption patterns. Thus, it measures environmental pressures in a multidimensional manner with high time resolution (monthly frequency).
Findings – The findings indicate that short-term effects are limited, but the bounds test suggests a long-term cointegration relationship between banking indicators and FEVE. The error correction coefficient of -0.55 suggests that short-term deviations largely disappear in the subsequent period and that a strong long-term balancing mechanism is in place. Furthermore, the monthly FEVE index embodies the finance-environment interaction by reflecting cyclical fluctuations in environmental pressures.
Originality/value – This study is one of the few to examine the relationship between banking sector-based financial development and environmental pressures in the Turkish context. While the literature typically analyzes finance-environment interactions using macroeconomic indicators or annual data sets, this research develops a multidimensional environmental pressure indicator using the monthly FEVE index. In this context, it concretizes the finance-environment interaction by reflecting the cyclical fluctuations in environmental pressures.
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