DOES DIGITAL FINANCE AND FINANCIAL INCLUSION STRENGTHEN ENVIRONMENTAL SUSTAINABILITY: EVIDENCE FROM ASIA

Abstract

Digital finance and financial inclusion are considered to be significant development strategies in many economies. Promoting both of these strategies helps increase environmental sustainability. Access to financing improves people's ability to engage in economic activities that degrade the environment. The goal of this research is to look at the impact of digital finance and financial inclusion on environmental sustainability in a few emerging Asian countries. From 2015 through 2021, the research study used quantitative secondary annual data acquired from World Development Indicators provided by the World Bank. The study's dependent variable is environmental sustainability, as measured by carbon dioxide emissions (CO2-EMS), and the independent variables are mobile money transactions (MMT), automated teller machines (ATMs), financial institution’s branches (FIB), and deposit accounts (DACC). The study also used some control variables, like population growth (POPG), industrialization (IND), and financial literacy (FL). The panel data from ten Asian nations was analyzed by using a fixed- or random-effects model. The outcomes revealed that mobile money transactions (MMT), automated teller machines (ATMs), and financial institution’s branches (FIB) have a significant negative relationship with CO2-EMS, whereas deposit accounts (DACC) have a significant positive association with CO2-EMS. The study has significant implications for countries seeking to improve their overall energy efficiency, thereby reducing environmental degradation. Countries should modernize technology and implement improved environmental practices to help improve environmental sustainability. In order to attain economic success and environmental sustainability, policymakers should develop policies that increase digital financial inclusion. Keywords: Digital finance, financial inclusion, mobile money transactions, financial literacy, environmental sustainability.