This study examines the impact of financial inclusion on carbon dioxide (CO2) emissions using quantile regression panel data for 97 countries from 2004 to 2020. A three-step Principal Component Analysis (PCA) is employed to construct a multidimensional index encompassing conventional, digital and microfinance inclusion. Results reveal a non-linear relationship between financial inclusion and CO2 emissions, varying across income levels and emission quantiles. In the short term, financial inclusion increases emissions, whereas in the medium and long term, it contributes to reductions, though effects are not significant at the 75th quantile. Additionally, higher GDP per capita and urbanisation raise emissions, while greater energy productivity and renewable energy consumption lower them. These findings highlight the need for financial policies that promote inclusion while supporting environmental sustainability, emphasising tailored strategies aligned with different income levels and emission quantiles.
Makni et al. (Wed,) studied this question.