Does financial inclusion and renewable energy impede environmental quality: Empirical evidence from BRI countries

Abstract

Financial inclusion is a critical element of economic development as a result of its contribution to the expansion of financial institutions and sectors in developing and developed countries. Therefore, using a sample of Belt and Road Initiative (BRI) countries, this research examines the effect of financial inclusion on CO2 emissions from 2005 to 2018. The CS-ARDL technique is applied to investigate the connection between CO2 emissions and financial inclusion. The financial inclusion index is measured using principal component analysis PCA). The study findings show that financial inclusion, financial development, FDI, trade openness, urbanization, and population have led to higher CO2 emissions in the region. Additionally, the increased renewable energy seems to have reduced CO2 emissions. The findings of this research are critical in the fight against pollution and the pursuit of long-term development goals. Financial inclusion goals must be brought into line with energy consumption patterns and environmental policies at the federal and state levels.