The Influence of Inclusive Finance on Atmospheric Carbon Emissions

Global initiatives towards atmospheric carbon emissions reduction have been vested towards a carbon neutral future, but emerging markets, especially in Africa, with emission reduction challenges may capitalise on inclusive financing as a possible influential tool to carbon emission abatement. This study examines the impact of inclusive finance on carbon emissions per capita in 13 South African Development Community (SADC) countries from 2002 to 2022. Financial inclusion was measured using access to Automated Teller Machines (ATMs), bank branches, and personal remittances. A robust Panel Estimated Generalised Least Squares (EGLS) regression was applied through two models, one a) assessing current-year effects and another b) using lagged years. Results show that having more ATMs in the previous year reduces carbon emissions per capita in the current year, while having more bank branches in the prior year increases them. This suggests that financial inclusion influences carbon emissions per capita and expanding ATM access may benefit both financial inclusion and environmental sustainability. Moreover, traditional financial inclusion channels, such as bank branches, are associated with higher emissions, while more technologically innovative proxies (ATMs), correspond to reductions. This highlights the importance of promoting innovative, technology-driven-sustainable financial service delivery models.