Unveiling the nexus: how environmental degradation and financial development influence corruption in emerging countries

Purpose – This study aims to explore the relationship between environmental degradation, financial
development and corruption control in South Asian countries, including Pakistan, Bangladesh, Bhutan, India,
Nepal and Sri Lanka.
Design/methodology/approach – The analysis is based on secondary data obtained from the World
Development Indicators and Worldwide Governance Indicators from 1996 to 2021. The research used pooled
ordinary least squares, fixed effects and random effects models to examine the connections between
environmental degradation, financial development and corruption control. Quantile regression and the
generalised method of moments were also used as robust analytical techniques.
Findings – The results reveal a positive and significant relationship between environmental degradation and
corruption control. However, financial development has a detrimental effect on the intensity of corruption in
South Asian countries. Specifically, increasing environmental degradation leads to the misallocation of
resources, which may exacerbate corruption. Furthermore, the lack of financial development in these nations
can worsen corruption, as effective governance does not support it.
Originality/value – To the best of the authors’ knowledge, this research provides new insights into the relationship
between environmental degradation, financial development and corruption control in South Asian countries.