Balancing finance and sustainability: The impact of financial access on carbon emissions through innovation and entrepreneurship in a global study

Eric B. Yiadom, Paapa N. Indome, John K.M. Mawutor and George Domfe

International Review of Economics & Finance, 2025, vol. 98, issue C

Abstract: This study examines the interplay between financial access, innovation, entrepreneurship, and carbon emissions using a dataset of 149 countries over 24 years (2000–2023). Employing two-stage least squares (2SLS) techniques to address endogeneity, the findings reveal that financial access significantly boosts innovation and entrepreneurship, which are key drivers of economic growth. However, financial access may also increase carbon emissions if not aligned with sustainable practices. Innovation reduces emissions by fostering environmentally friendly technologies, while entrepreneurship initially contributes to emissions but can mitigate this effect when supported by sustainable financial practices. The study highlights the importance of financial policies that promote green innovation and sustainable entrepreneurship, offering actionable insights for policymakers to achieve economic growth while addressing global carbon emissions.

Keywords: Financial access; Carbon emissions; Innovation; Entrepreneurship; Sustainable development (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:98:y:2025:i:c:s1059056025000413

DOI: 10.1016/j.iref.2025.103878

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