Linking personal remittance and fossil fuels energy consumption to environmental degradation: evidence from all SAARC countries

Personal remittances significantly boost financial development of SAARC countries, but it is not favorable for their quality of environment. Therefore, this research spotlights the heterogeneous effect of remittance, financial development, fossil fuels energy consumption and carbon dioxide emissions in all SAARC economies using dynamic panel data from 1990 to 2020. The estimation among variables is checked through fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS), and fixed effect ordinary least squares (FE-OLS) methodologies. Findings showed that remittance inflows increase carbon dioxides emissions. Financial development, fossil fuels energy consumption, and population increase carbon dioxide emissions in these economies. Additionally, these countries’ economic growth (GDP) contributes to environmental degradation in the long run. Furthermore, the findings support the inverted U-shaped environmental Kuznets curve (EKC), which reveals that SAARC countries need to enhance the ecological trade-offs, clean technological innovations, and promote a sustained lifestyle to improve environmental quality. So, the government should empower the financial sectors to reduce the dependence on detrimental energy resources and invest in renewable energy resources. Policymakers should take remittances and financial development into account as policy instruments to develop long-term policies.