Examination of Environmental Kuznets Curve with Emphasis on the Role of Financial and Institutional Development

Environment and economics were introduced by the Environmental Kuznets' Curve (EKC). In recent years, the effect of financial and institutional development has been added to the literature as an influential variable on environmental pollution. The current study explored the effect of economic development, financial development and institutional quality on environmental destruction in high-income, upper-middle income, lower-middle income and low-income countries during the time period of 2002-2015. The results of SUR estimation showed that policymakers in Iran, must improve the financial system in addition to consider environmental impacts. On the other hand, the improvement of institutional development indicators should be taken into consideration by policymaker.