Al-Hikmah University Journal

The study investigates the dynamic interactions among financial development, industrial production and carbon emissions in Nigeria from 1971 to 2020. To achieve this, the functional and structural forms of the production function were estimated for the three models, using the existing theoretical framework. Annual data covering the period from 1971 to 2020 that were sourced from the CBN database, International Monetary Fund (IMF), International Energy Agency (IEA) and World Bank's World Development Indicators were employed for the analysis. Having conducted the unit root and co-integration tests, the ARDL method was employed to derive the long-run regression equation estimates. The findings of the study revealed that both financial development and industrial production have positive effects on carbon emissions in the long run in Nigeria, just as financial development too has effects on carbon emissions and industrial production. Consequently, financial development can be regarded as a major driver of industrial production and carbon emissions in Nigeria. Additionally, industrial production has a positive effect on carbon emissions, indicating that the level of industrialisation is a contributor to the emission of carbon dioxide (CO2). It is therefore recommended that policymakers should pursue financial sector development and industrialisation strategies that encourage longrun environmental sustainability.