Abstract
With the improvement of inclusive financial system, China’s economy has made significant development and growth. It worth in-depth investigation on environmental impact of financial inclusion, since growing GDP usually accompanied by more intensive carbon emission. This paper aims to reveal whether financial inclusion contributes to the carbon reduction in China using county-level dataset. A fixed-effect panel regression approach is adopted to examine the impact of financial inclusion on county-level regional carbon emissions. The estimation results imply that financial inclusion plays an important role in reducing carbon emissions. The mediation effect analysis reveals two channels through which financial inclusion imposes negative impact on the level of regional carbon emissions. One is to elevate the carbon sequestration capacity by increasing vegetation coverage, and the other is to improve the industrial structure through enhanced financial support. In addition to being a bridge between economic opportunity and output, financial inclusion can also act as an effective measure for addressing climate change.
Highlights
Global consensus has been reached that the emission of carbon dioxide and other greenhouse gases is the main cause of climate deterioration and its social and economic consequences
This paper evaluates the impact of the development of financial inclusion on carbon emissions based on panel data at county level
This study first examines the direct impact of financial inclusion on carbon reduction, and we focus on the dual-channel chain carbon emission reduction effect of inclusive finance
Summary
Global consensus has been reached that the emission of carbon dioxide and other greenhouse gases is the main cause of climate deterioration and its social and economic consequences. In December 2015, 196 parties around the world entered into the “Paris Climate Change Agreement”. The goal of this agreement is to control the increase in global average temperature below 2°C. This study examines the impact of financial inclusion on carbon emissions. Because of the fact that economic expansions usually come along with higher level of carbon emission, it is of great significance to study the impact of financial inclusion on carbon emissions. Our research can shed light on similar situation that other developing countries may encounter with
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