Financial inclusion and its influence on renewable energy consumption-environmental performance: the role of ICTs in China

Jingchao Feng,Qing Sun,Sidra Sohail

doi:10.1007/s11356-022-19480-9

Abstract

Financial inclusion means that individuals and businesses can easily avail financial goods and services at an affordable cost. It is widely recognized that financial inclusion can help preserve the environment by increasing the consumption of renewable energy sources. Hence, our basic aim is to investigate whether financial inclusion has any effect on renewable energy consumption and environmental quality in China. To get the estimates of the variables, we have preferred the ARDL model. The estimates of the model confirm that a rise in the number of ATMs and total insurance has a positive impact on renewable energy consumption in China in the long run. Conversely, an increase in the number of ATMs and total insurance negatively affects CO2 emissions in China. In general, we can say that financial inclusion increases renewable energy consumption and reduces CO2 emissions in China. Therefore, by using financial inclusion, policymakers should try to divert the resources towards environmentally friendly consumption and production activities.

Highlights

Over the last few decades, two main problems that have irked the international community are a rise in the demand for energy and an increase in greenhouse gas (GHG) emissions
We found that in the Phillips Perron (PP) test renewable energy consumption, CO2 emissions, bank branches, ATMs, total insurance, internet users, and year of schooling contains the issue of a unit root
Over the past few decades, the use of information and communications technology (ICT) has been on the rise in every sector of the economy, and it played an essential role in the economic development of the nations

Summary

Introduction

Over the last few decades, two main problems that have irked the international community are a rise in the demand for energy and an increase in greenhouse gas (GHG) emissions. GHG emissions is the heavy reliance on fossil fuels as energy sources (International Energy Agency, 2017).On one side, the enormous increase in growth-related activities causes the consumption of non-renewable energy sources (e.g., coal, oil, and gas) to rise. Emerging economies depend heavily on the consumption of non-renewable energy sources for economic development; their role is crucial in achieving such targets (Qin & Ozturk, 2021). Financial inclusion can have long-lasting effects on renewable energy consumption and the environmental performance of countries. While a plethora of studies are available that have analyzed the linkage between environmental quality and financial development, such as Farhani and Ozturk (2015), Acheampong (2019), and Li et al (2022) for emerging economies and China respectively

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