Financial Stability, Energy Consumption, Economic Growth, and Environmental Quality: Fresh Evidences of Iran

Despite the importance of the relationship between financial system stability, energy consumption, economic growth and Environmental quality in economic policies, in economics literature in the country has not been examined. For this purpose, for this purpose, in this study is an endeavor to examine the impact of financial stability, renewable and non- renewable energy consumption and economic growth on Environmental quality (co2 emission) in Iran.  Autoregressive distributed lag bounding test has been used to estimate the short run and long run relationship between these variables, in the framework of the multivariate time series model, over the period 1359-1395. Also, Toda-Yamamato causality is employed to investigating causality relationship between these variables. The results indicate that financial stability have no significant impact on environmental quality in Iran, while economic growth, population density and non-renewable have a negative and significant impact on environmental quality. In addition, the results show a positive and significant impact of renewable energy consumption on improving environmental quality in Iran. Also, the results support the environmental Kuznets curve (EKC) hypothesis during the underlying study period in Iran considering the variables of financial stability and energy consumption. According to the results, a set of financial, economic, demographic and energy supply policies is necessary to reduce the negative impacts of Environmental pollution by policymakers.