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Does financial inclusion improve energy efficiency?

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  • Yu, Yantuan
  • Tang, Kai

Abstract

This paper extends the empirical debate on the effects of financial inclusion on energy efficiency. We employ a non-convex metafrontier data envelopment analysis approach to estimate energy efficiency, and examine the impacts of financial inclusion on energy efficiency using a dataset of China's 251 prefecture-level cities during 2011–2015. Our results document that financial inclusion significantly improved energy efficiency. Specifically, a unit increase in financial inclusion would lead to an increase in energy efficiency by approximately 6.5 %. To address the endogeneity, we introduce two instrumental variables into our baseline model. Estimates of two stage least squares also support our main findings. Moreover, we find that marketization is one of the primary channels for financial inclusion to improve energy efficiency. These findings are robust across estimation method, model specifications and alternative measures of both financial inclusion and energy efficiency. Policy implications are presented based on the empirical results.

Suggested Citation

  • Yu, Yantuan & Tang, Kai, 2023. "Does financial inclusion improve energy efficiency?," Technological Forecasting and Social Change, Elsevier, vol. 186(PA).
    • Handle: RePEc:eee:tefoso:v:186:y:2023:i:pa:s004016252200631x
    DOI: 10.1016/j.techfore.2022.122110
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    More about this item

    Keywords

    Financial inclusion; Energy efficiency; Non-convex metafrontier; Data envelopment analysis; Tobit model;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • 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
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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