Financial inclusion and its influence on economic-environmental performance: demand and supply perspectives

In this study, we want to test the impact of financial inclusion on the economic growth and the environmental quality of OBOR economies. We have selected four different proxies of financial inclusion, two from the perspective of the supply side and two from the perspective of the demand side. For empirical analysis, we have applied 2SLS and GMM methods. In the economic growth model, among the variables of financial inclusion, only the variable of ATMS is positively significant in the 2SLS approach; however, when we apply the GMM approach, two variables, i.e., ATMS and branches, are positively significant implying that supply-side financial inclusion is vital for economic growth in OBOR countries. On the other side, the variables of financial inclusion, whether supply side or demand side, exerted a positive impact on the CO2 emissions irrespective of the estimation techniques, i.e., 2SLS and GMM. These findings imply that financial inclusion, in general, causes CO2 emissions to rise.