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: Environmental degradation remains a major challenge in South Asia, where rapid financial integration, banking expansion, and urban development have placed increasing pressure on ecological sustainability. This study examines the effects of banking development, financial globalisation, and urbanisation on the load capacity factor in the SAARC region over the period 1995 to 2022 within the load capacity curve framework. The preliminary analysis reveals the presence of cross-sectional dependence and slope heterogeneity, while unit root testing shows that the variables are integrated at level or first difference. Panel cointegration results confirm the existence of a long run relationship among the variables. The panel autoregressive distributed lag and quantile regression estimates support the load capacity curve hypothesis, showing that clean energy improves the load capacity factor, whereas banking development, financial globalisation, and urbanisation reduce it. The causality analysis identifies a unidirectional relationship running from GDP to the load capacity factor, together with bidirectional causality involving banking development, financial globalisation, and the load capacity factor. These findings suggest that improving environmental sustainability in the SAARC region requires stronger investment in clean energy, the promotion of green banking, and the adoption of low carbon urban development strategies consistent with sustainable development goals.
Ridwan et al. (Mon,) studied this question.