Role of financial inclusion, green innovation, and energy efficiency for environmental performance? Evidence from developed and emerging economies in the lens of sustainable development

Abstract

In recent years, the importance of identifying the determinants of environmental performance has acknowledged huge importance from the academicians. This study expands the horizon of this debate by introducing new potential determinants of environmental performance. In doing so, the authors study the impacts of financial inclusion, green innovation, and energy efficiency on ecological issues. The prime objective of this study is to report some novel findings and implications regarding structural change of economy, green innovation and industry related factors in context of sustainable development. The authors use the annual data of variables from 2000 to 2018, and employ the novel quantile regression method. Notable, the results mention that industrial growth and financial inclusion positively induce ecological footprints. The results show that impact of financial inclusion increases with higher quantiles, implying that financial inclusion induces higher ecological footprint in countries with already higher ecological footprint levels than those with lower ecological footprint levels. The study suggest that policymakers must introduce proper policies to improve the financial system, which has important implications for renewable and clean energies. The developed economies should focus heavily on increasing green patents to the point where the positive results of such technologies in the form of less or carbon-neutral processes begin to pour in. It is also critical to transition industrial economies to carbon-free technologies, as industrial output is a key contributor to the growing ecological footprint.