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The trade-off between economic performance and environmental quality: does financial inclusion matter for emerging Asian economies?

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Abstract

This study examines the role of financial inclusion on the environment-economic performance in the top five Asian emerging economies. The data used for empirical investigation covers the time period from 1995 to 2019. Financial inclusion is measured through bank branches, bank credit, and insurance premiums. To check long-run associations, the panel ARDL approach has been employed for empirical analysis. The empirical evidence confirms the significant associations between financial inclusion-GDP nexus and financial inclusion-CO2 nexus. The findings show that bank branches and bank credit have a significantly positive impact on economic growth and CO2 emissions in the long run. However, insurance premium has no impact on economic growth but it exerts a significant negative impact on carbon emissions in the long run. Furthermore, energy consumption is highly sensitive to economic growth and carbon emissions. The study delivers imperative points for pollution eradication and attaining sustained economic growth. There is a need for government-level efforts to align the targets of financial inclusion with economic growth and environmental policies.

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Data availability

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Authors and Affiliations

  1. School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing, China

    Dong Liu

  2. School of Insurance and Economics, University of International Business and Economics, Beijing, China

    Yuantao Xie

  3. Faculty of Management and Administrative Sciences, University of Sialkot, Punjab, Pakistan

    Muhammad Hafeez

  4. Department of Economics, Government College University, Faisalabad, Pakistan

    Ahmed Usman

Authors
  1. Dong Liu
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  2. Yuantao Xie
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  3. Muhammad Hafeez
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  4. Ahmed Usman
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Contributions

This idea was given by Liu Dong and Yuantao Xie. Muhammad Hafeez, Liu Dong, Yuantao Xie, and Ahmed Usman collected the data, computed data analysis, and wrote the complete paper, while Liu Dong and Yuantao Xie read and approved the final version.

Corresponding authors

Correspondence to Yuantao Xie or Ahmed Usman.

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Liu, D., Xie, Y., Hafeez, M. et al. The trade-off between economic performance and environmental quality: does financial inclusion matter for emerging Asian economies?. Environ Sci Pollut Res 29, 29746–29755 (2022). https://doi.org/10.1007/s11356-021-17755-1

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  • DOI: https://doi.org/10.1007/s11356-021-17755-1

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