Impact of Russia’s financial development on the environment in other EAEU countries

The removal of barriers to the movement of goods, services and factors of production within an integration association leads to the emergence of spillover effects that have a significant impact on the welfare of the population in the integrating countries. The paper analyzes one of such spillover effects of integration related to the development of financial markets and instruments. The aim of the study is to identify the impact of Russia’s financial development on the environment in the EAEU countries in the long-run interval. Using the fixed effects model, the study verifies the hypothesis that the development of the financial market and financial instruments of the largest economy of the integration association has an impact on the environment of neighboring countries, through an increase in economic growth and CO2 emissions. The study finds that Russia’s financial development has a positive and statistically significant impact on GDP growth rates and CO2 emissions in the EAEU countries, while the impact of financial development on the environment is statistically insignificant.