Impact of Green House Gas (Ghg), Carbon Emission, Economic Growth and Globalization Index on Stock Market Performance: Evidence from the NEXT-11 Economies

Abstract

This study explored the impact of greenhouse gas emissions, economic growth, foreign direct investment (FDI), and globalization upon the Next-11 (N-11) economies' stock market performance between 2013 and 2022. Due to the increasing significance of environmental and sustainability dimensions upon investment decisions across the globe, the impact of these dimensions upon financial markets for the case of emerging economies has gained significance. Through multiple regression conducted in Python, the research analyzed the annually observed data for stock returns with energy use per capita (carbon emission proxy), the GDP per capita, FDI inflows, and the KOF Globalization Index. The results showed that the emission of greenhouse gas had a statistically significant negative impact on stock performance, indicating lower investor confidence in the countries with more environmental damage. FDI was, however, significantly positively correlated with stock performance, indicating the importance of foreign capital inflows in enhancing market performance. Globalization and energy consumption were weak but economically significant correlations. The adjusted R² for the model was reasonably low (≈ 15%), as is typical for macrolevel work with more countries and more variables. Despite the availability of data and multicollinearity-associated variable exclusion restrictions, the article provided considerable insight into the connection between environmental and economic measures and capital market performances. The findings are important policy and investment strategies for policymakers, investors, and financial institutions upon the integration of environmental responsibility into financial decision-making across the N-11 countries. The study is an additional contribution to the limited but growing empirical literature chronicling sustainable finance within the N-11 region.