Do financial inclusion and environmental regulations affect the green economy? An empirical study with a generalized linear model.

Abstract

Reducing carbon emissions is an efficient strategy to cope with global warming, which continues to be a frightening element for environmental protection. However, the energy industry is responsible for a lot of pollution in the atmosphere. To promote a low-carbon growth model, it is essential to endorse financial inclusion and environmental regulations. This research uses panel data from 70 nations, covering 1995 to 2021, to examine the interplay between economic growth, human capital, urbanization, trade openness, and environmental regulation as the primary defining element of efficient energy. Several tests have been used to ensure that the data are typically distributed; these include the cross-sectional dependence test, the KMO test, and the Bartlett test. The generalized linear model and Driscoll-Kraay standard errors have also been implemented for interim and final analysis. Results show that low-carbon energy sources are guaranteed for certain economies when financial inclusion and environmental regulation are implemented. Economic development, urbanization, trade openness, and human capital significantly impact green economic recovery. In light of these findings, policymakers are working to increase energy efficiency and boost their citizens' living standards by promoting financial inclusion and environmental regulation like imposing environmental taxes and governmental laws for industries.