Revisiting the linkage between financial inclusion and energy productivity: Technology implications for climate change

Abstract

Countries are concurrently taking a special interest in tackling both the issues of economic growth and the challenges posed to the environment. It is important to find a solution to the problem of deteriorating environment and to make available services that are both inexpensive and environmentally friendly. However, adequate financial resources are necessary in order to make the shift to a low-carbon energy system. Financial inclusion has been found to have positive effects on economic growth and development. However, its relationship with energy productivity has not been extensively studied. Using panel data analysis, this study fills this knowledge gap by exploring the potential impact of financial inclusion on energy productivity, controlling for other relevant factors for five selected countries, which include Australia, China, Indonesia, Japan and South Korea over the period of 2004 to 2021. The results of quantile regression approach suggest that financial inclusion has a positive effect on energy productivity, with higher levels of financial inclusion associated with greater energy efficiency. The study also finds that technological innovation, renewable energy consumption, and carbon emissions have significant impacts on energy productivity. These results have important implications for policymakers seeking to promote sustainable development and energy efficiency through financial inclusion initiatives. This study concludes that financial inclusion can be used as an effective tool to enhance energy productivity in sample countries.