This study examines the effect of CO2 emissions from gaseous fuel consumption on financial inclusion through physical financial access points in non-crisis years.
Twenty-two countries were analyzed. The estimation methods are the median quantile and two-stage least squares regression methods. CO2 emissions were measured by CO2 emissions from gaseous fuel consumption. Financial inclusion was measured using a financial inclusion index. The control variables are institutional quality, monetary policy action, bank stability, inflation and the level of unemployment.
Higher CO2 emissions are associated with a high level of financial inclusion in European, Asian and developing countries, implying that CO2 emissions do not decrease the level of financial inclusion. CO2 emissions decrease the level of financial inclusion in African countries that have strong institutions and a high lending rate. CO2 emissions also decrease the level of financial inclusion in developing countries that have a high lending rate.
Policymakers and banks in European, African and Asian countries should reduce their reliance on physical financial access points to increase financial inclusion. They should adopt digital financial inclusion strategies to mitigate the adverse effect of CO2 emissions on the physical financial access points provided by banks to increase financial inclusion.
This study is unique and different from existing studies in that it focuses on the effect of CO2 emissions on financial inclusion in non-crisis years.
