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Financial Inclusion and Threshold Effects in Carbon Emissions

Author

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  • Nidhaleddine Ben Cheikh

    (ESSCA School of Management)

  • Christophe Rault

    (University of Orléans)

Abstract

Although financial inclusion would induce greater pollutant emissions through economic activity, improved access to financial services may facilitate investment in clean technologies. This study investigates whether financial inclusion has influenced the dynamics of carbon dioxide (CO2) emissions over the last decade using a sample of 70 countries. We implement panel threshold techniques to explore possible regime shifts in environmental quality. Our results reveal that the influence of increased financial access on air pollution depends on the economic development stage. While financial inclusion can increase CO2 emissions in lower-income regimes, environmental quality appears to be enhanced, with more inclusiveness at later developmental stages. Less-developed countries require more robust environmental policies to align their financial inclusion initiatives with sustainable economic development.

Suggested Citation

  • Nidhaleddine Ben Cheikh & Christophe Rault, 2024. "Financial Inclusion and Threshold Effects in Carbon Emissions," Working Papers 1713, Economic Research Forum, revised 20 Aug 2024.
    • Handle: RePEc:erg:wpaper:1713
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    Cited by:

    1. Ben Cheikh, Nidhaleddine & Ben Zaied, Younes & Mahmoud, Faisal, 2025. "Energy transition, institutional quality, and financial development in Africa," Research in International Business and Finance, Elsevier, vol. 74(C).
    2. Sami Mustafa Omar & Wagdi M. S. Khalifa & Tolga Oz, 2025. "From Fossil Dependence on Sustainability: The Effects of Energy Transition, Green Growth, and Financial Inclusion on Environmental Degradation in the MENA Region," Energies, MDPI, vol. 18(14), pages 1-22, July.
    3. Shahbaz, Muhammad & Barut, Abdulkadir & Alofaysan, Hind & Çamkaya, Serhat, 2025. "The impact of inclusive finance and lifelong learning on carbon neutrality: Evidence from African countries," Research in International Business and Finance, Elsevier, vol. 78(C).

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