IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v107y2022ics0140988322000342.html
   My bibliography  Save this article

How financial inclusion affects the collaborative reduction of pollutant and carbon emissions: The case of China

Author

Listed:
  • Shahbaz, Muhammad
  • Li, Jiaman
  • Dong, Xiucheng
  • Dong, Kangyin

Abstract

To explore whether financial inclusion affects the collaborative reduction of pollutant and carbon emissions, we analyze the impact of financial inclusion on these emissions using a sample of 30 Chinese provinces from 2011 to 2017. This study further discusses the impact of financial inclusion in terms of asymmetry, heterogeneity, and the mediating mechanism. Our empirical results reveal that financial inclusion achieves the collaborative reduction of pollutant and carbon emissions. This further proves the negative impact of financial inclusion on pollutant emissions, which is universal in different geographical locations with different levels of pollution. The impact of financial inclusion on carbon emissions is asymmetric and varies geographically. Increasing financial inclusion has an indirect impact on the collaborative reduction of pollutant and carbon emissions through the energy consumption effect and the energy structure effect. Besides, increased financial inclusion may reduce carbon emissions by improving the renewable energy sector. Furthermore, the direct effect of financial inclusion on carbon emissions is insignificant. Accordingly, financial inclusion should be considered a priority in China's provincial and national development strategies because of its usefulness in promoting the collaborative reduction of pollutant and carbon emissions.

Suggested Citation

  • Shahbaz, Muhammad & Li, Jiaman & Dong, Xiucheng & Dong, Kangyin, 2022. "How financial inclusion affects the collaborative reduction of pollutant and carbon emissions: The case of China," Energy Economics, Elsevier, vol. 107(C).
    • Handle: RePEc:eee:eneeco:v:107:y:2022:i:c:s0140988322000342
    DOI: 10.1016/j.eneco.2022.105847
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988322000342
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2022.105847?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fungáčová, Zuzana & Weill, Laurent, 2015. "Understanding financial inclusion in China," China Economic Review, Elsevier, vol. 34(C), pages 196-206.
    2. Jalil, Abdul & Feridun, Mete, 2011. "The impact of growth, energy and financial development on the environment in China: A cointegration analysis," Energy Economics, Elsevier, vol. 33(2), pages 284-291, March.
    3. Tol, Richard S. J., 2005. "The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties," Energy Policy, Elsevier, vol. 33(16), pages 2064-2074, November.
    4. Jianda Wang & Xiucheng Dong & Kangyin Dong, 2021. "How renewable energy reduces CO2 emissions? Decoupling and decomposition analysis for 25 countries along the Belt and Road," Applied Economics, Taylor & Francis Journals, vol. 53(40), pages 4597-4613, August.
    5. Tamazian, Artur & Bhaskara Rao, B., 2010. "Do economic, financial and institutional developments matter for environmental degradation? Evidence from transitional economies," Energy Economics, Elsevier, vol. 32(1), pages 137-145, January.
    6. Fodha, Mouez & Zaghdoud, Oussama, 2010. "Economic growth and pollutant emissions in Tunisia: An empirical analysis of the environmental Kuznets curve," Energy Policy, Elsevier, vol. 38(2), pages 1150-1156, February.
    7. Le, Thai-Ha & Quah, Euston, 2018. "Income level and the emissions, energy, and growth nexus: Evidence from Asia and the Pacific," International Economics, Elsevier, vol. 156(C), pages 193-205.
    8. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    9. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    10. Salahuddin, Mohammad & Gow, Jeff & Ozturk, Ilhan, 2015. "Is the long-run relationship between economic growth, electricity consumption, carbon dioxide emissions and financial development in Gulf Cooperation Council Countries robust?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 317-326.
    11. Bekhet, Hussain Ali & Othman, Nor Salwati, 2018. "The role of renewable energy to validate dynamic interaction between CO2 emissions and GDP toward sustainable development in Malaysia," Energy Economics, Elsevier, vol. 72(C), pages 47-61.
    12. Baulch, Bob & Duong Do, Thuy & Le, Thai-Ha, 2018. "Constraints to the uptake of solar home systems in Ho Chi Minh City and some proposals for improvement," Renewable Energy, Elsevier, vol. 118(C), pages 245-256.
    13. Acheampong, Alex O., 2019. "Modelling for insight: Does financial development improve environmental quality?," Energy Economics, Elsevier, vol. 83(C), pages 156-179.
    14. Sadorsky, Perry, 2010. "The impact of financial development on energy consumption in emerging economies," Energy Policy, Elsevier, vol. 38(5), pages 2528-2535, May.
    15. Abbasi, Faiza & Riaz, Khalid, 2016. "CO2 emissions and financial development in an emerging economy: An augmented VAR approach," Energy Policy, Elsevier, vol. 90(C), pages 102-114.
    16. Li, Jiaman & Dong, Xiucheng & Jiang, Qingzhe & Dong, Kangyin & Liu, Guixian, 2021. "Natural gas trade network of countries and regions along the belt and road: Where to go in the future?," Resources Policy, Elsevier, vol. 71(C).
    17. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    18. Liu, Guixian & Dong, Xiucheng & Jiang, Qingzhe & Dong, Cong & Li, Jiaman, 2018. "Natural gas consumption of urban households in China and corresponding influencing factors," Energy Policy, Elsevier, vol. 122(C), pages 17-26.
    19. Dogan, Eyup & Seker, Fahri, 2016. "The influence of real output, renewable and non-renewable energy, trade and financial development on carbon emissions in the top renewable energy countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 1074-1085.
    20. Shahbaz, Muhammad & Destek, Mehmet Akif & Dong, Kangyin & Jiao, Zhilun, 2021. "Time-varying impact of financial development on carbon emissions in G-7 countries: Evidence from the long history," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    21. Ozturk, Ilhan & Acaravci, Ali, 2013. "The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey," Energy Economics, Elsevier, vol. 36(C), pages 262-267.
    22. Le, Thai-Ha & Le, Ha-Chi & Taghizadeh-Hesary, Farhad, 2020. "Does financial inclusion impact CO2 emissions? Evidence from Asia," Finance Research Letters, Elsevier, vol. 34(C).
    23. Zhao, Jun & Shahbaz, Muhammad & Dong, Xiucheng & Dong, Kangyin, 2021. "How does financial risk affect global CO2 emissions? The role of technological innovation," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    24. Tamazian, Artur & Chousa, Juan Piñeiro & Vadlamannati, Krishna Chaitanya, 2009. "Does higher economic and financial development lead to environmental degradation: Evidence from BRIC countries," Energy Policy, Elsevier, vol. 37(1), pages 246-253, January.
    25. Dong, Kangyin & Ren, Xiaohang & Zhao, Jun, 2021. "How does low-carbon energy transition alleviate energy poverty in China? A nonparametric panel causality analysis," Energy Economics, Elsevier, vol. 103(C).
    26. Ang, James B., 2008. "Economic development, pollutant emissions and energy consumption in Malaysia," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 271-278.
    27. Richard S. J. Tol, 2009. "The Economic Effects of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 29-51, Spring.
    28. Soytas, Ugur & Sari, Ramazan, 2009. "Energy consumption, economic growth, and carbon emissions: Challenges faced by an EU candidate member," Ecological Economics, Elsevier, vol. 68(6), pages 1667-1675, April.
    29. Shahbaz, Muhammad & Solarin, Sakiru Adebola & Mahmood, Haider & Arouri, Mohamed, 2013. "Does financial development reduce CO2 emissions in Malaysian economy? A time series analysis," Economic Modelling, Elsevier, vol. 35(C), pages 145-152.
    30. Wang, Juan & Zhang, Sulan & Zhang, Qingjun, 2021. "The relationship of renewable energy consumption to financial development and economic growth in China," Renewable Energy, Elsevier, vol. 170(C), pages 897-904.
    31. Liu, Yang & Luan, Lin & Wu, Weilong & Zhang, Zhiqiang & Hsu, Yen, 2021. "Can digital financial inclusion promote China's economic growth?," International Review of Financial Analysis, Elsevier, vol. 78(C).
    32. Renzhi, Nuobu & Baek, Yong Jun, 2020. "Can financial inclusion be an effective mitigation measure? evidence from panel data analysis of the environmental Kuznets curve," Finance Research Letters, Elsevier, vol. 37(C).
    33. Raghutla, Chandrashekar & Shahbaz, Muhammad & Chittedi, Krishna Reddy & Jiao, Zhilun, 2021. "Financing clean energy projects: New empirical evidence from major investment countries," Renewable Energy, Elsevier, vol. 169(C), pages 231-241.
    34. Yan Shen & C. James Hueng & Wenxiu Hu, 2020. "Using digital technology to improve financial inclusion in China," Applied Economics Letters, Taylor & Francis Journals, vol. 27(1), pages 30-34, January.
    35. repec:zbw:bofitp:2014_010 is not listed on IDEAS
    36. Soytas, Ugur & Sari, Ramazan & Ewing, Bradley T., 2007. "Energy consumption, income, and carbon emissions in the United States," Ecological Economics, Elsevier, vol. 62(3-4), pages 482-489, May.
    37. Abbasi, Kashif Raza & Shahbaz, Muhammad & Jiao, Zhilun & Tufail, Muhammad, 2021. "How energy consumption, industrial growth, urbanization, and CO2 emissions affect economic growth in Pakistan? A novel dynamic ARDL simulations approach," Energy, Elsevier, vol. 221(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shahbaz, Muhammad & Hye, Qazi Muhammad Adnan & Tiwari, Aviral Kumar & Leitão, Nuno Carlos, 2013. "Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 109-121.
    2. Acheampong, Alex O., 2019. "Modelling for insight: Does financial development improve environmental quality?," Energy Economics, Elsevier, vol. 83(C), pages 156-179.
    3. Omri, Anis & Daly, Saida & Rault, Christophe & Chaibi, Anissa, 2015. "Financial development, environmental quality, trade and economic growth: What causes what in MENA countries," Energy Economics, Elsevier, vol. 48(C), pages 242-252.
    4. Shahbaz, Muhammad & Shahzad, Syed Jawad Hussain & Ahmad, Nawaz & Alam, Shaista, 2016. "Financial development and environmental quality: The way forward," Energy Policy, Elsevier, vol. 98(C), pages 353-364.
    5. Zhao, Jing & Zhao, Ziru & Zhang, Huan, 2021. "The impact of growth, energy and financial development on environmental pollution in China: New evidence from a spatial econometric analysis," Energy Economics, Elsevier, vol. 93(C).
    6. Shahbaz, Muhammad & Destek, Mehmet Akif & Dong, Kangyin & Jiao, Zhilun, 2021. "Time-varying impact of financial development on carbon emissions in G-7 countries: Evidence from the long history," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    7. Xiaoxia Shi & Haiyun Liu & Joshua Sunday Riti, 2019. "The role of energy mix and financial development in greenhouse gas (GHG) emissions’ reduction: evidence from ten leading CO2 emitting countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 695-729, October.
    8. Shahbaz, Muhammad & Nasir, Muhammad Ali & Roubaud, David, 2018. "Environmental degradation in France: The effects of FDI, financial development, and energy innovations," Energy Economics, Elsevier, vol. 74(C), pages 843-857.
    9. Md. Golam Kibria & Ismay Jahan & Jannatul Mawa, 2021. "Asymmetric effect of financial development and energy consumption on environmental degradation in South Asia? New evidence from non-linear ARDL analysis," SN Business & Economics, Springer, vol. 1(4), pages 1-18, April.
    10. Jamal Sekali & Mohamed Bouzahzah, 2019. "Financial Development and Environmental Quality: Empirical Evidence for Morocco," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 67-74.
    11. Ahmed Imran Hunjra & Tahar Tayachi & Muhammad Irfan Chani & Peter Verhoeven & Asad Mehmood, 2020. "The Moderating Effect of Institutional Quality on the Financial Development and Environmental Quality Nexus," Sustainability, MDPI, vol. 12(9), pages 1-13, May.
    12. Ali, Wajahat & Abdullah, Azrai & Azam, Muhammad, 2017. "Re-visiting the environmental Kuznets curve hypothesis for Malaysia: Fresh evidence from ARDL bounds testing approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 990-1000.
    13. Mumin Atalay Cetin & Ibrahim Bakirtas, 2020. "The long-run environmental impacts of economic growth, financial development, and energy consumption: Evidence from emerging markets," Energy & Environment, , vol. 31(4), pages 634-655, June.
    14. Muhammad, Shahbaz, 2012. "Multivariate granger causality between CO2 Emissions, energy intensity, financial development and economic growth: evidence from Portugal," MPRA Paper 37774, University Library of Munich, Germany, revised 31 Mar 2012.
    15. Shahbaz, Muhammad & Nasir, Muhammad Ali & Hille, Erik & Mahalik, Mantu Kumar, 2020. "UK's net-zero carbon emissions target: Investigating the potential role of economic growth, financial development, and R&D expenditures based on historical data (1870–2017)," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    16. Khezri, Mohsen & Karimi, Mohammad Sharif & Khan, Y.A. & Abbas, S.Z., 2021. "The spillover of financial development on CO2 emission: A spatial econometric analysis of Asia-Pacific countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
    17. Shahbaz, Muhammad, 2013. "Does financial instability increase environmental degradation? Fresh evidence from Pakistan," Economic Modelling, Elsevier, vol. 33(C), pages 537-544.
    18. Charfeddine, Lanouar & Kahia, Montassar, 2019. "Impact of renewable energy consumption and financial development on CO2 emissions and economic growth in the MENA region: A panel vector autoregressive (PVAR) analysis," Renewable Energy, Elsevier, vol. 139(C), pages 198-213.
    19. Mohsen Khezri & Mohammad Sharif Karimi & Yousaf Ali Khan & Mehdi Khodaei, 2023. "Environmental implications of regional financial development on air pollution: evidence from European countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(6), pages 4889-4909, June.
    20. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.

    More about this item

    Keywords

    Financial inclusion; Collaborative reduction of pollutants; Carbon emissions; Asymmetric analysis; Geographical heterogeneity; Mediating mechanism;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:107:y:2022:i:c:s0140988322000342. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.