This paper examines two unresolved issues regarding the nexus between financial system development and environmental quality. (i) Does the structure of the financial system matter? (ii) Is there a nonlinear relationship? We employ the newly developed dynamic common correlated effect (CCE) and the dynamic panel generalized method of moments (GMM) estimators in order to address potential endogeneity, heterogeneity and cross-sectional dependence in a panel of 58 countries. The panel data analysis reveals that the structure of the financial system matters in safeguarding environmental quality. More precisely, bank-based financial development enhances environmental quality, whereas the impact of market-based financial development is tenuous. We find some evidences of a nonlinear relationship between financial system development and environmental quality. The disaggregated data reveals the countries where financial structure matters for environmental quality, and countries where a nonlinear relationship exists between the variables. Therefore, countries that want to maintain environmental quality should strengthen the development of bank-based financial system. Moreover, effort to develop and reposition the stock markets should be prioritized in countries’ environmental policies with a view to sustaining environmental quality.

本文研究了有关金融体系发展与环境质量之间关系的两个未解决的问题。（i）金融体系的结构是否重要？（ii）是否存在非线性关系？为了解决58个国家/地区中潜在的内生性，异质性和横截面依赖性，我们采用了新开发的动态共同相关效应（CCE）和动态面板广义矩矩（GMM）估计器。面板数据分析表明，金融体系的结构对维护环境质量至关重要。更准确地说，基于银行的金融发展提高了环境质量，而基于市场的金融发展的影响却微弱。我们发现金融体系发展与环境质量之间存在非线性关系的一些证据。分解后的数据揭示了金融结构对环境质量至关重要的国家，以及变量之间存在非线性关系的国家。因此，想要保持环境质量的国家应加强银行金融体系的发展。此外，在国家的环境政策中应优先考虑发展和重新定位股票市场的努力，以维持环境质量。希望保持环境质量的国家应加强银行金融体系的发展。此外，在国家的环境政策中应优先考虑发展和重新定位股票市场的努力，以维持环境质量。希望保持环境质量的国家应加强银行金融体系的发展。此外，在国家的环境政策中应优先考虑发展和重新定位股票市场的努力，以维持环境质量。