Financial Inclusion, ICT Development, and CO2 Emissions: An ARDL Approach

Vu‐Linh‐Toan Le, Rakesh Gupta, Khanh‐Duy Pham and Luan Huynh Nguyen

Sustainable Development, 2025, vol. 33, issue 5, 7791-7806

Abstract: Climate change and environmental sustainability have become critical global concerns, with financial inclusion and Information and Communications Technology (ICT) development playing increasingly significant roles in shaping CO2 emissions. This study explores their intricate relationship using the autoregressive distributed lag (ARDL) approach, yielding mixed results. Our findings reveal that financial inclusion initially increases CO2 emissions, followed by a modest decline over time. However, the overall long‐term effect remains an increase in CO2 emissions. Meanwhile, ICT development has no significant short‐term impact but contributes to rising emissions in the long term due to the energy‐intensive expansion of digital infrastructure. However, when financial inclusion and ICT development are combined, they lead to short‐term reductions in CO2 emissions by enhancing transaction efficiency and optimizing resource allocation. These findings underscore the importance of integrating financial and digital strategies to promote sustainable growth while mitigating long‐term environmental risks.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:wly:sustdv:v:33:y:2025:i:5:p:7791-7806

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