Can enhancing financial inclusivity lower climate risks by inhibiting carbon emissions? Contextual evidence from emerging economies

Muntasir Murshed, Rizwan Ahmed, Khurshid Khudoykulov, Chamaiporn Kumpamool, Nusiebeh Nahar Falah Alrwashdeh and Haider Mahmood

Research in International Business and Finance, 2023, vol. 65, issue C

Abstract: Climate change is regarded as a global concern whereby lowering climate risks, especially by curbing greenhouse gas emissions, has become a critically important policy agenda worldwide. Hence, this study assesses whether financial inclusion, alongside energy efficiency improvement, renewable energy use, economic growth, international trade, and urbanization, can mitigate carbon dioxide emissions in 22 emerging economies. Considering the period of analysis from 2008 to 2018 and utilizing econometric methods robust to handling cross-sectionally-dependent, heterogeneous, and endogenous panel data, the findings reveal that financial inclusion is directly associated with higher discharges of carbon dioxide. Contrarily, energy efficiency improvement and higher share of renewable energy in the aggregate energy consumption level inhibit carbon dioxide emissions. Moreover, energy efficiency gains moderate the financial inclusion-emissions nexus by jointly reducing carbon emissions with greater financial inclusivity. Finally, the results indicate that economic growth, international trade, and urbanization trigger climate risks by boosting the emission figures. In light of these findings, several carbon dioxide-mitigating policies are recommended for neutralizing climate risks in emerging countries of concern.

Keywords: Carbon dioxide emissions; Climate risks; Emerging economies; Energy use efficiency; Financial inclusivity; Renewable energy (search for similar items in EconPapers)
JEL-codes: F4 G2 Q4 Q54 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923000284

DOI: 10.1016/j.ribaf.2023.101902

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