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Nonlinear and Nonparametric Causal Relationship Between Financial Inclusion, Energy Efficiency, and Sustainable Environment in Developed Economies

Author

Listed:
  • Qiaoqi Lang

    (Wuhan Textile University)

  • Asadullah Khaskheli

    (Hainan University)

  • Syed Ali Raza

    (IQRA University)

  • Komal Akram Khan

    (IQRA University)

  • Chin-Hong Puah

    (Universiti Malaysia Sarawak)

Abstract

A sustainable environment is as important as the economy’s growth, but, unfortunately, economic growth is environmentally unsustainable. Hence, there is a need to adopt efficient ways to help maintain a sustainable environment. The present research is designed to evaluate the association between financial inclusion, energy efficiency, and a sustainable environment in developed economies. The World Bank has regarded financial inclusion as a crucial element for attaining seven Sustainable Development Goals. So, there is a need to examine the causal association between financial inclusion, energy efficiency, and a sustainable environment. We employed the linear Granger causality test, Brock-Dechert-Scheinkman test for nonlinearity, and parameter stability testing. These techniques confirmed the presence of a nonlinear association and structural breaks between proposed variables. Later, the nonparametric causality in the quantiles technique has been employed for the analysis. The findings reveal that financial inclusions play a crucial role in maintaining a sustainable environment, but it is necessary to adopt energy efficiency policies to mitigate emissions. Furthermore, the recommendations for policymakers, government, and future scholars are discussed in the paper.

Suggested Citation

  • Qiaoqi Lang & Asadullah Khaskheli & Syed Ali Raza & Komal Akram Khan & Chin-Hong Puah, 2024. "Nonlinear and Nonparametric Causal Relationship Between Financial Inclusion, Energy Efficiency, and Sustainable Environment in Developed Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 5121-5150, June.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:2:d:10.1007_s13132-023-01198-9
    DOI: 10.1007/s13132-023-01198-9
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    References listed on IDEAS

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