Exploring the impact of financial inclusion on greenhouse gas emissions (CO2) and energy efficiency: evidence from developing countries

Ameena Arshad () and Shagufta Parveen ()
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Ameena Arshad: COMSATS University Islamabad
Shagufta Parveen: COMSATS University Islamabad

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2024, vol. 26, issue 11, No 25, 27723-27738

Abstract: Abstract The paper empirically looks over the consequences of financial inclusion on CO2 emissions in the developing nations of the world. To check this impact, pooled ordinary least square, fixed effect, and CS ARDL techniques are applied using the annual data of 29 developing countries from 2004 through 2018. The results highlight the overall influence of financial inclusion is directly proportional to CO2 emissions as more financial inclusion lead to more CO2 emissions, proving the findings of the available literature. We find evidence that more income, foreign direct investment, urbanization, and population lead to more CO2 emissions, while trade openness assists to decrease CO2 emissions. The results indicated that providing more financial inclusion services leads to more manufacturing and industrial activities which results in more CO2 emissions. Rapid urbanization has increased the need for energy across a range of sectors, including manufacturing, transportation, and residential, which increases CO2 emissions. The policymakers in these countries should take strict measures to curb carbon emissions by increasing financial inclusion and foreign direct investment in supporting such projects that are environmentally friendly. Therefore, to mitigate such current and future issues, policymakers in developing countries need to give serious attention to this area to fulfill sustainable development goals.

Keywords: Financial inclusion; Green energy; Developing countries; Foreign direct investment; CO2 emissions; Fixed effect model; CS ARDL (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10668-023-03780-2

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