Nonlinear and Nonparametric Causal Relationship Between Financial Inclusion, Energy Efficiency, and Sustainable Environment in Developed Economies

Qiaoqi Lang (), Asadullah Khaskheli (), Syed Ali Raza (), Komal Akram Khan () and Chin-Hong Puah
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Qiaoqi Lang: Wuhan Textile University
Asadullah Khaskheli: Hainan University
Syed Ali Raza: IQRA University
Komal Akram Khan: IQRA University

Journal of the Knowledge Economy, 2024, vol. 15, issue 2, No 2, 5150 pages

Abstract: Abstract A sustainable environment is as important as the economy’s growth, but, unfortunately, economic growth is environmentally unsustainable. Hence, there is a need to adopt efficient ways to help maintain a sustainable environment. The present research is designed to evaluate the association between financial inclusion, energy efficiency, and a sustainable environment in developed economies. The World Bank has regarded financial inclusion as a crucial element for attaining seven Sustainable Development Goals. So, there is a need to examine the causal association between financial inclusion, energy efficiency, and a sustainable environment. We employed the linear Granger causality test, Brock-Dechert-Scheinkman test for nonlinearity, and parameter stability testing. These techniques confirmed the presence of a nonlinear association and structural breaks between proposed variables. Later, the nonparametric causality in the quantiles technique has been employed for the analysis. The findings reveal that financial inclusions play a crucial role in maintaining a sustainable environment, but it is necessary to adopt energy efficiency policies to mitigate emissions. Furthermore, the recommendations for policymakers, government, and future scholars are discussed in the paper.

Keywords: Financial inclusion; Energy efficiency; Causality in quantiles; Developed economies (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01198-9

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