Can financial inclusion be an effective mitigation measure? evidence from panel data analysis of the environmental Kuznets curve

This study demonstrates the existence of financial inclusion-based environment Kuznets curve (EKC) by analyzing a panel of 103 countries during 2004-2014. The relationship between financial inclusion and CO2 emissions is found to be an inverted U-shape. This finding is robust to different measurements of the financial inclusion index constructed by principal composite analysis and modifications of the estimation model. The existence of a financial inclusion-based EKC provides an important policy insight that financial inclusion can be used as a mitigation measure. Therefore, policy makers should consider the synergy effect of financial inclusion in designing development and climate change policies.