Investigating the causal relationship between financial development and carbon emission in the emerging country

The current study investigates the causality relationship between financial development and carbon dioxide (CO2) emission in Bahrain by adopting time series data from 1980–2018. vector error correction model (VECM) is employed as an appropriate order to analyse data. While augmented Dickey-Fuller (ADF) test was used detect stationary variables. However, domestic per capita has been a proxy of economic growth, while measured credit provided sector. results indicate that there long-term association amongst all intended variables at 5% significant level. Meanwhile, only impact on short term. For Granger test, population led positive CO2, does not Granger-cause population. findings did support hypothesis environmental Kuznets curve (EKC), these are line with other previous empirical (Saidi & Mbarek, 2017). These essential contribute policymakers controlling policies confirm loans availed sector firms friendly machinery tools for environment can decrease CO2 emission.