Does financial inclusion impact CO2 emissions? Evidence from Asia

By Thai‐Ha Le, Ha-chi Le, Farhad Taghizadeh‐Hesary. 2020

488 citations recorded by the source corpus.

Abstract This study examines the impact of financial inclusion on CO2 emissions using a sample of 31 Asian countries during the period 2004-2014. Three composite indicators for financial inclusion are constructed using principal component analysis (PCA) based on normalized variables. To estimate the model, we adopted the Hoechle (2007) procedure which produces Driscoll-Kraay standard errors for linear panel models that are not only heteroskedasticity consistent but also robust to general forms of cross-sectional dependence. We find that income, energy consumption, industrialization, urbanization, FDI and financial inclusion appear to have led to higher emissions of CO2 in the region. Meanwhile, increased openness to trade seems to have reduced CO2 emissions. The findings are qualitatively robust to different proxies of financial inclusions and reasonable modifications to specification of the model. The empirical results imply that there are currently no policy synergies between growing financial inclusion and mitigating CO2 emissions. Thus, financial inclusion should be integrated into climate change adaptation strategies at local, national and regional levels, especially to address the side effect of higher CO2 emissions associated with improved financial inclusion.

Subfields: Economics and Econometrics, Pollution, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/8b674420dd99963e6ab1b53dfdb8c4994e48af08

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In Economics and Econometrics

1. Muntasir Murshed
2. Zeeshan Khan
3. Kangyin Dong
4. Siqun Yang
5. M. H. Chadni
6. Jannatul Ferdaus

In Pollution

1. Zeeshan Khan
2. Kangyin Dong
3. Muntasir Murshed
4. M. H. Chadni
5. Jannatul Ferdaus

In Renewable Energy, Sustainability and the Environment

1. Zeeshan Khan
2. Muntasir Murshed
3. Siqun Yang
4. Kangyin Dong
5. M. H. Chadni
6. Jannatul Ferdaus

Citations in the corpus

• The roles of export diversification and composite country risks in carbon emissions abatement: evidence from the signatories of the regional comprehensive economic partnership agreement (2021, background): “Secondly, several studies in the past have separately assessed the impacts of political, financial, and economic risks on CO2 emissions (Adedoyin and Zakari 2020; Le, Le, and Taghizadeh-Hesary 2020; Román, Cansino, and Rodas 2018; Vu and Huang 2020).”