Paper Title
Financial Globalization and Climate Risk

Abstract
This paper aims to study the symmetric and asymmetric effects of financial globalization on climate risk in the MENA region. Using a panel dataset of seven non-OPEC MENA countries over the period 1980-2014, we perform a comprehensive econometric analysis based on the panel ARDL and non-linear panel ARDL (NARDL) models and a battery of tests, including cross-sectional dependence tests, second-generation unit root tests and cointegration tests. The findings reveal a significant long-term impact of financial globalization on climate risk that can be symmetric or asymmetric depending on the nature of financial globalization. While external debt liabilities appear to be climate risky because they increase CO2 emissions significantly and linearly, the long-term impact of FDI and portfolio investment liabilities on CO2 emissions is asymmetric, with only negative shocks of FDI and portfolio investment decreasing CO2 emissions. This suggests that financial globalization through foreign investment (FDI and portfolio investment) is more environmentally friendly than financial globalization through debt, which provides interesting insights for policy makers. Keyword - Financial Globalization; CO2; Climate Risk; FDI; Portfolio Investment; Debt; Non-Linear Dynamics