IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v65y2023ics0275531923000284.html
   My bibliography  Save this article

Can enhancing financial inclusivity lower climate risks by inhibiting carbon emissions? Contextual evidence from emerging economies

Author

Listed:
  • Murshed, Muntasir
  • Ahmed, Rizwan
  • Khudoykulov, Khurshid
  • Kumpamool, Chamaiporn
  • Alrwashdeh, Nusiebeh Nahar Falah
  • Mahmood, Haider

Abstract

Climate change is regarded as a global concern whereby lowering climate risks, especially by curbing greenhouse gas emissions, has become a critically important policy agenda worldwide. Hence, this study assesses whether financial inclusion, alongside energy efficiency improvement, renewable energy use, economic growth, international trade, and urbanization, can mitigate carbon dioxide emissions in 22 emerging economies. Considering the period of analysis from 2008 to 2018 and utilizing econometric methods robust to handling cross-sectionally-dependent, heterogeneous, and endogenous panel data, the findings reveal that financial inclusion is directly associated with higher discharges of carbon dioxide. Contrarily, energy efficiency improvement and higher share of renewable energy in the aggregate energy consumption level inhibit carbon dioxide emissions. Moreover, energy efficiency gains moderate the financial inclusion-emissions nexus by jointly reducing carbon emissions with greater financial inclusivity. Finally, the results indicate that economic growth, international trade, and urbanization trigger climate risks by boosting the emission figures. In light of these findings, several carbon dioxide-mitigating policies are recommended for neutralizing climate risks in emerging countries of concern.

Suggested Citation

  • Murshed, Muntasir & Ahmed, Rizwan & Khudoykulov, Khurshid & Kumpamool, Chamaiporn & Alrwashdeh, Nusiebeh Nahar Falah & Mahmood, Haider, 2023. "Can enhancing financial inclusivity lower climate risks by inhibiting carbon emissions? Contextual evidence from emerging economies," Research in International Business and Finance, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923000284
    DOI: 10.1016/j.ribaf.2023.101902
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0275531923000284
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2023.101902?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. Murshed, Muntasir & Saboori, Behnaz & Madaleno, Mara & Wang, Hong & Doğan, Buhari, 2022. "Exploring the nexuses between nuclear energy, renewable energy, and carbon dioxide emissions: The role of economic complexity in the G7 countries," Renewable Energy, Elsevier, vol. 190(C), pages 664-674.
    2. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    3. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    4. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    5. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
    6. Boulogiorgou, D. & Ktenidis, P., 2020. "TILOS local scale Technology Innovation enabling low carbon energy transition," Renewable Energy, Elsevier, vol. 146(C), pages 397-403.
    7. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    8. Chen, Maozhi & Sinha, Avik & Hu, Kexiang & Shah, Muhammad Ibrahim, 2021. "Impact of technological innovation on energy efficiency in industry 4.0 era: Moderation of shadow economy in sustainable development," Technological Forecasting and Social Change, Elsevier, vol. 164(C).
    9. Chudik, Alexander & Pesaran, M. Hashem, 2015. "Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors," Journal of Econometrics, Elsevier, vol. 188(2), pages 393-420.
    10. 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.
    11. Chen, Zhe & Song, Pei & Wang, Baolu, 2021. "Carbon emissions trading scheme, energy efficiency and rebound effect – Evidence from China's provincial data," Energy Policy, Elsevier, vol. 157(C).
    12. Ji, Qiang & Zhang, Dayong, 2019. "How much does financial development contribute to renewable energy growth and upgrading of energy structure in China?," Energy Policy, Elsevier, vol. 128(C), pages 114-124.
    13. Sadorsky, Perry, 2010. "The impact of financial development on energy consumption in emerging economies," Energy Policy, Elsevier, vol. 38(5), pages 2528-2535, May.
    14. Khan, Samiha & Murshed, Muntasir & Ozturk, Ilhan & Khudoykulov, Khurshid, 2022. "The roles of energy efficiency improvement, renewable electricity production, and financial inclusion in stimulating environmental sustainability in the Next Eleven countries," Renewable Energy, Elsevier, vol. 193(C), pages 1164-1176.
    15. Dandan Dou & Liying Li, 2022. "Does sustainable financial inclusion and energy efficiency ensure green environment? Evidence from B.R.I.C.S. countries," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 5599-5614, December.
    16. Paramati, Sudharshan Reddy & Sinha, Avik & Dogan, Eyup, 2017. "The significance of renewable energy use for economic output and environmental protection: Evidence from the next 11 developing economies," MPRA Paper 100087, University Library of Munich, Germany.
    17. 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.
    18. Maxwell Kongkuah & Hongxing Yao & Veli Yilanci, 2022. "The relationship between energy consumption, economic growth, and CO2 emissions in China: the role of urbanisation and international trade," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 4684-4708, April.
    19. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    20. Sun, Yunpeng & Li, Haoning & Andlib, Zubaria & Genie, Mesfin G., 2022. "How do renewable energy and urbanization cause carbon emissions? Evidence from advanced panel estimation techniques," Renewable Energy, Elsevier, vol. 185(C), pages 996-1005.
    21. Luis Miguel Fonseca & José Pedro Domingues & Alina Mihaela Dima, 2020. "Mapping the Sustainable Development Goals Relationships," Sustainability, MDPI, vol. 12(8), pages 1-15, April.
    22. Lingui Qin & Syed Raheem & Muntasir Murshed & Xu Miao & Zeeshan Khan & Dervis Kirikkaleli, 2021. "Does financial inclusion limit carbon dioxide emissions? Analyzing the role of globalization and renewable electricity output," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(6), pages 1138-1154, November.
    23. Doğan, Buhari & Chu, Lan Khanh & Ghosh, Sudeshna & Diep Truong, Huong Hoang & Balsalobre-Lorente, Daniel, 2022. "How environmental taxes and carbon emissions are related in the G7 economies?," Renewable Energy, Elsevier, vol. 187(C), pages 645-656.
    24. 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.
    25. Anton, Sorin Gabriel & Afloarei Nucu, Anca Elena, 2020. "The effect of financial development on renewable energy consumption. A panel data approach," Renewable Energy, Elsevier, vol. 147(P1), pages 330-338.
    26. Yao, Xing & Yasmeen, Rizwana & Hussain, Jamal & Hassan Shah, Wasi Ul, 2021. "The repercussions of financial development and corruption on energy efficiency and ecological footprint: Evidence from BRICS and next 11 countries," Energy, Elsevier, vol. 223(C).
    27. 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).
    28. Haldar, Anasuya & Sethi, Narayan, 2022. "Environmental effects of Information and Communication Technology - Exploring the roles of renewable energy, innovation, trade and financial development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    29. Shahid Ali & Eyup Dogan & Fuzhong Chen & Zeeshan Khan, 2021. "International trade and environmental performance in top ten‐emitters countries: The role of eco‐innovation and renewable energy consumption," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(2), pages 378-387, March.
    30. Brockway, Paul E. & Sorrell, Steve & Semieniuk, Gregor & Heun, Matthew Kuperus & Court, Victor, 2021. "Energy efficiency and economy-wide rebound effects: A review of the evidence and its implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    31. Suvajit Banerjee & Muntasir Murshed, 2020. "Do emissions implied in net export validate the pollution haven conjecture? Analysis of G7 and BRICS countries," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 12(3), pages 297-319.
    32. Ahmad, Najid & Du, Liangsheng, 2017. "Effects of energy production and CO2 emissions on economic growth in Iran: ARDL approach," Energy, Elsevier, vol. 123(C), pages 521-537.
    33. Asif Razzaq & Tehreem Fatima & Muntasir Murshed, 2023. "Asymmetric effects of tourism development and green innovation on economic growth and carbon emissions in top 10 GDP countries," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 66(3), pages 471-500, February.
    34. Shahbaz, Muhammad & Sharma, Rajesh & Sinha, Avik & Jiao, Zhilun, 2021. "Analyzing nonlinear impact of economic growth drivers on CO2 emissions: Designing an SDG framework for India," Energy Policy, Elsevier, vol. 148(PB).
    35. Shahbaz, muhammad & Solarin, Sakiru Adebola & Sbia, Rashid & Bibi, Sadia, 2015. "Does Energy Intensity Contribute to CO2 Emissions? A Trivariate Analysis in Selected African Countries," MPRA Paper 64335, University Library of Munich, Germany, revised 19 Mar 2015.
    36. Wang, Xiong & Wang, Xiao & Ren, Xiaohang & Wen, Fenghua, 2022. "Can digital financial inclusion affect CO2 emissions of China at the prefecture level? Evidence from a spatial econometric approach," Energy Economics, Elsevier, vol. 109(C).
    37. 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).
    38. Li, Xiaolong & Ozturk, Ilhan & Ullah, Sana & Andlib, Zubaria & Hafeez, Muhammad, 2022. "Can top-pollutant economies shift some burden through insurance sector development for sustainable development?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 326-336.
    39. Yilmaz Bayar & Mehmet Hilmi Ozkaya & Laura Herta & Marius Dan Gavriletea, 2021. "Financial Development, Financial Inclusion and Primary Energy Use: Evidence from the European Union Transition Economies," Energies, MDPI, vol. 14(12), pages 1-14, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bilgili, Faik & Soykan, Erkan & Dumrul, Cüneyt & Awan, Ashar & Önderol, Seyit & Khan, Kamran, 2023. "Disaggregating the impact of natural resource rents on environmental sustainability in the MENA region: A quantile regression analysis," Resources Policy, Elsevier, vol. 85(PA).

    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. Barut, Abdulkadir & Kaya, Emine & Bekun, Festus Victor & Cengiz, Sevgi, 2023. "Environmental sustainability amidst financial inclusion in five fragile economies: Evidence from lens of environmental Kuznets curve," Energy, Elsevier, vol. 269(C).
    2. Khan, Samiha & Murshed, Muntasir & Ozturk, Ilhan & Khudoykulov, Khurshid, 2022. "The roles of energy efficiency improvement, renewable electricity production, and financial inclusion in stimulating environmental sustainability in the Next Eleven countries," Renewable Energy, Elsevier, vol. 193(C), pages 1164-1176.
    3. Yang Yu & Magdalena Radulescu & Abanum Innocent Ifelunini & Stephen Obinozie Ogwu & Joshua Chukwuma Onwe & Atif Jahanger, 2022. "Achieving Carbon Neutrality Pledge through Clean Energy Transition: Linking the Role of Green Innovation and Environmental Policy in E7 Countries," Energies, MDPI, vol. 15(17), pages 1-23, September.
    4. Oğuz Saygın & Ömer İskenderoğlu, 2022. "Does the level of financial development affect renewable energy? Evidence from developed countries with system generalized method of moments (System‐GMM) and cross‐sectionally augmented autoregressive," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 1326-1342, October.
    5. Haiying Liu & Avik Sinha & Mehmet Akif Destek & Majed Alharthi & Muhammad Wasif Zafar, 2022. "Moving toward sustainable development of sub‐Saharan African countries: Investigating the effect of financial inclusion on environmental quality," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 2015-2024, December.
    6. Ding, Yuanyi, 2023. "Does natural resources cause sustainable financial development or resources curse? Evidence from group of seven economies," Resources Policy, Elsevier, vol. 81(C).
    7. Khan, Muhammad Tariq Iqbal & Yaseen, Muhammad Rizwan & Ali, Qamar, 2019. "Nexus between financial development, tourism, renewable energy, and greenhouse gas emission in high-income countries: A continent-wise analysis," Energy Economics, Elsevier, vol. 83(C), pages 293-310.
    8. Muntasir Murshed & Uzma Khan & Aarif Mohammad Khan & Ilhan Ozturk, 2023. "Can energy productivity gains harness the carbon dioxide‐inhibiting agenda of the Next 11 countries? Implications for achieving sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 307-320, February.
    9. Alvarado, Rafael & Tillaguango, Brayan & Murshed, Muntasir & Ochoa-Moreno, Santiago & Rehman, Abdul & Işık, Cem & Alvarado-Espejo, Johana, 2022. "Impact of the informal economy on the ecological footprint: The role of urban concentration and globalization," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 750-767.
    10. Anu, & Singh, Amit Kumar & Raza, Syed Ali & Nakonieczny, Joanna & Shahzad, Umer, 2023. "Role of financial inclusion, green innovation, and energy efficiency for environmental performance? Evidence from developed and emerging economies in the lens of sustainable development," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 213-224.
    11. Muhammad Awais Baloch & Danish, 2022. "CO2 emissions in BRICS countries: what role can environmental regulation and financial development play?," Climatic Change, Springer, vol. 172(1), pages 1-14, May.
    12. Lingui Qin & Syed Raheem & Muntasir Murshed & Xu Miao & Zeeshan Khan & Dervis Kirikkaleli, 2021. "Does financial inclusion limit carbon dioxide emissions? Analyzing the role of globalization and renewable electricity output," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(6), pages 1138-1154, November.
    13. Yasmeen, Rizwana & Zhaohui, Cui & Hassan Shah, Wasi Ul & Kamal, Muhammad Abdul & Khan, Anwar, 2022. "Exploring the role of biomass energy consumption, ecological footprint through FDI and technological innovation in B&R economies: A simultaneous equation approach," Energy, Elsevier, vol. 244(PA).
    14. Lin, Boqiang & Okoye, Jude O., 2023. "Towards renewable energy generation and low greenhouse gas emission in high-income countries: Performance of financial development and governance," Renewable Energy, Elsevier, vol. 215(C).
    15. Gao, Chunjiao & Chen, Hongxi, 2023. "Electricity from renewable energy resources: Sustainable energy transition and emissions for developed economies," Utilities Policy, Elsevier, vol. 82(C).
    16. Kostakis, Ioannis & Arauzo-Carod, Josep-Maria, 2023. "The key roles of renewable energy and economic growth in disaggregated environmental degradation: Evidence from highly developed, heterogeneous and cross-correlated countries," Renewable Energy, Elsevier, vol. 206(C), pages 1315-1325.
    17. Francisco García-Lillo & Eduardo Sánchez-García & Bartolomé Marco-Lajara & Pedro Seva-Larrosa, 2023. "Renewable Energies and Sustainable Development: A Bibliometric Overview," Energies, MDPI, vol. 16(3), pages 1-22, January.
    18. Guan, Zepeng & Hossain, Mohammad Razib & Sheikh, Muhammad Ramzan & Khan, Zeeshan & Gu, Xiao, 2023. "Unveiling the interconnectedness between energy-related GHGs and pro-environmental energy technology: Lessons from G-7 economies with MMQR approach," Energy, Elsevier, vol. 281(C).
    19. Alvarado, Rafael & Murshed, Muntasir & Cifuentes-Faura, Javier & Işık, Cem & Razib Hossain, Mohammad & Tillaguango, Brayan, 2023. "Nexuses between rent of natural resources, economic complexity, and technological innovation: The roles of GDP, human capital and civil liberties," Resources Policy, Elsevier, vol. 85(PA).
    20. Rizwana Yasmeen & Ihtsham Ul Haq Padda & Xing Yao & Wasi Ul Hassan Shah & Muhammad Hafeez, 2022. "Agriculture, forestry, and environmental sustainability: the role of institutions," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(6), pages 8722-8746, June.

    More about this item

    Keywords

    Carbon dioxide emissions; Climate risks; Emerging economies; Energy use efficiency; Financial inclusivity; Renewable energy;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G2 - Financial Economics - - Financial Institutions and Services
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    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:riibaf:v:65:y:2023:i:c:s0275531923000284. 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/ribaf .

    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.