Does financial inclusion and education limit CO2 emissions in China? A new perspective

Liu, Nan; Hong, Cencen; Sohail, Muhammad Tayyab

Does financial inclusion and education limit CO2 emissions in China? A new perspective

2022

Liu, Nan | Hong, Cencen | Sohail, Muhammad Tayyab

China is the second-largest economy in the world after the USA and the largest contributor of CO₂ emissions in the globe followed by the USA. In this study, we have included two factors that could affect the CO₂ emissions in China i.e. financial inclusion and education. Five different proxies of financial inclusion have been estimated through the ARDL technique and four of them have confirmed the favorable impact of financial inclusion on the environmental quality in China. Similarly, the role of education proved to be beneficial in reducing CO₂ emissions in China. Among the control variables, GDP and population also exerted a negative impact on CO₂ emissions, whereas, the research and development activities encourage carbon emissions. Our findings suggest that financial inclusion and education can play an important role in the fight against global warming. Funds should be transferred to those firms, businesses, and individuals who are involved in eco-innovations. Government should try to educate people on the environment and the harmful effects of global warming. Knowledge helps to build up technology that is more energy-efficient; hence, innovation through knowledge should be promoted to fortify the positive impacts of education on the eco-system.

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