Financial inclusion and environmental quality: does corruption control matter?

Abstract

Purpose

Literature has widely discussed the relevant role of financial development in determining atmospheric quality. However, there has not been much discussion of how financial inclusion (FIC) plays its role in environmental quality. Thus, this research aims to unveil the role of financial inclusion in determining the CO₂ emissions which serve as a proxy of environmental quality. In addition, this study examines the moderating role of corruption control (CC) in the nexus of FIC-CC.

Design/methodology/approach

The empirical results were based on 22 years of annual data from five Brazil, Russia, India, China and South Africa (BRICS) economies, covering the years 1996–2017. The authors use the autoregressive distributed lag (ARDL) model to check regression among variables.

Findings

The empirical findings first disclosed the positive impact of FIC whereas CC had an inverse impact on CO₂ emissions. However, the moderating role of CC was observed in mitigating the adverse impact of FIC on ecological quality. In addition, the statistical analysis further showed an inverse impact of economic growth and foreign investment and a positive impact of trade volume and energy consumption on CO₂ emissions.

Practical implications

This analysis states an important policy regarding integrated FIC and green environmental requirements. Additionally, the negative externality of FIC can be controlled by improving the CC.

Originality/value

This study complements the existing literature on FIC and environmental quality by adding the moderating role of CC.

Citation

Tabash, M.I., Farooq, U., El Refae, G.A., Abu-Rashed, J. and Al-Faryan, M.A.S. (2023), "Financial inclusion and environmental quality: does corruption control matter?", International Journal of Social Economics, Vol. 50 No. 8, pp. 1123-1138. https://doi.org/10.1108/IJSE-06-2022-0407