Skip to main content

Advertisement

SpringerLink
Log in

Impact of financial inclusion and human capital on environmental quality: evidence from emerging economies

  • Research Article
  • Published:
Environmental Science and Pollution Research Aims and scope Submit manuscript

Abstract

Emerging nations have recorded significant economic development over the last few decades, which has increased natural resources extraction and consumption. On account of rising development, the financial sectors of these nations are continuously expanding their services and products. These countries are also experiencing increasing environmental deterioration which requires raising the level of environmental awareness and seeking different mitigation options. Against this backdrop, this research studies the role of financial inclusion and human capital in the environmental quality of emerging nations. To do so, the panel data from 2004 to 2019 is collected and second-generation econometric methodologies are utilized to analyze the data. Controlling remittances, economic growth, and natural resources, the study revealed cointegration among variables. The results of the panel quantile regression indicated that financial inclusion improves the environmental quality of emerging countries as it is negatively connected with CO2. However, human capital in these nations adds to environmental deterioration. Likewise, natural resources and economic growth raise CO2, and therefore, reduce environmental quality. Apart from this, remittances are playing a critical role in reducing CO2. After this, the research utilized the Cup-FM and Cup-BC methods and noticed a similar association among variables. Lastly, policy implications of these findings are discussed.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Data availability

Data sources and relevant links are provided in the paper to access data.

References

  • Abdouli M, Hammami S (2017) Exploring links between FDI inflows, energy consumption and economic growth: further evidence from MENA countries. J Econ Dev 42(1):95–117

    Article  Google Scholar 

  • Abid M (2016) Impact of economic, financial, and institutional factors on CO2 emissions: evidence from sub-Saharan Africa economies. Util Policy 41:85–94

    Article  Google Scholar 

  • Adedoyin F, Abubakar I, Bekun FV, Sarkodie SA (2020) Generation of energy and environmental-economic growth consequences: is there any difference across transition economies? Energy Rep 6:1418–1427

    Article  Google Scholar 

  • Adefabi RA et al (2011) Effects of FDI and human capital on economic growth in Sub-Saharan Africa. Pakistan J Soc Sci 8:32–38

    Article  Google Scholar 

  • Ahmad M, Jiang P, Murshed M et al (2021) Modelling the dynamic linkages between eco-innovation, urbanization, economic growth and ecological footprints for G7 countries: does financial globalization matter? Sustain Cities Soc 70:102881

    Article  Google Scholar 

  • Ahmed Z, Le HP (2020) Linking Information Communication Technology, trade globalization index, and CO2 emissions: evidence from advanced panel techniques. Environ Sci Pollut Res 28:8770–8781. https://doi.org/10.1007/s11356-020-11205-0

    Article  Google Scholar 

  • Ahmed Z, Nathaniel SP, Shahbaz M (2020a) The criticality of information and communication technology and human capital in environmental sustainability: evidence from Latin American and Caribbean countries. J Clean Prod 125529. https://doi.org/10.1016/j.jclepro.2020.125529

  • Ahmed Z, Wasif M, Ali S (2020b) Linking urbanization, human capital, and the ecological footprint in G7 countries : an empirical analysis. Sustain Cities Soc 55:102064. https://doi.org/10.1016/j.scs.2020.102064

    Article  Google Scholar 

  • Aleksynska M, Havrylchyk O (2013) FDI from the south: the role of institutional distance and natural resources. Eur J Polit Econ 29:38–53

    Article  Google Scholar 

  • Ali J, Khan MA (2020) Micro and Macro financial inclusion and their impacts on economic growth: evidence from Asian economies with alternative approaches. Int Trans J Eng Manag Appl Sci Technol 11:1–15

    Google Scholar 

  • Allard A, Takman J, Uddin GS, Ahmed A (2018) The N-shaped environmental Kuznets curve: an empirical evaluation using a panel quantile regression approach. Environ Sci Pollut Res 25:5848–5861. https://doi.org/10.1007/s11356-017-0907-0

    Article  CAS  Google Scholar 

  • Arnold E (2005) Managing human resources to improve employee retention. Health Care Manag (frederick) 24:132–140

    Article  Google Scholar 

  • Aslan G, Deléchat C, Newiak MM, Yang MF (2017) Inequality in financial inclusion and income inequality. International Monetary Fund

  • Atkinson G, Hamilton K (2003) Savings, growth and the resource curse hypothesis. World Dev 31:1793–1807

    Article  Google Scholar 

  • Bai J, Kao C, Ng S (2009) Panel cointegration with global stochastic trends. J Econom 149:82–99. https://doi.org/10.1016/j.jeconom.2008.10.012

    Article  Google Scholar 

  • Baloch MA, Zhang J, Iqbal K, Iqbal Z (2019) The effect of financial development on ecological footprint in BRI countries: evidence from panel data estimation. Environ Sci Pollut Res 26:6199–6208. https://doi.org/10.1007/s11356-018-3992-9

    Article  Google Scholar 

  • Baulch B, Do TD, Le T-H (2018a) Constraints to the uptake of solar home systems in Ho Chi Minh City and some proposals for improvement. Renew Energy 118:245–256

    Article  Google Scholar 

  • Baulch B, Duong Do T, Le TH (2018b) Constraints to the uptake of solar home systems in Ho Chi Minh City and some proposals for improvement. Renew Energy. https://doi.org/10.1016/j.renene.2017.10.106

    Article  Google Scholar 

  • Bekun FV, Alola AA, Sarkodie SA (2019a) Toward a sustainable environment: nexus between CO2 emissions, resource rent, renewable and nonrenewable energy in 16-EU countries. Sci Total Environ 657:1023–1029. https://doi.org/10.1016/j.scitotenv.2018.12.104

    Article  CAS  Google Scholar 

  • Bekun FV, Emir F, Sarkodie SA (2019b) Another look at the relationship between energy consumption, carbon dioxide emissions, and economic growth in South Africa. Sci Total Environ 655:759–765

    Article  CAS  Google Scholar 

  • Bengoa M, Sanchez-Robles B (2003) Foreign direct investment, economic freedom and growth: new evidence from Latin America. Eur J Polit Econ 19:529–545

    Article  Google Scholar 

  • Bernauer T, Böhmelt T, Koubi V (2012) Environmental changes and violent conflict. Environ Res Lett 7:15601

    Article  Google Scholar 

  • Boschini AD, Pettersson J, Roine J (2007) Resource curse or not: a question of appropriability. Scand J Econ 109:593–617. https://doi.org/10.1111/j.1467-9442.2007.00509.x

    Article  Google Scholar 

  • Checchi D, De Simone G, Faini R (2007) Skilled migration, FDI and human capital investment (No. IZA Discussion Papers 2795)

  • Cheng L, Zhang J (2020) Assessment of coupling coordination between tourism development and economic growth after the 2008 Wenchuan earthquake: Beichuan, China. Asia Pacific J Tour Res 25:602–619

    Article  Google Scholar 

  • Cole K, Daly A, Mak A (2009) Good for the soul: The relationship between work, wellbeing and psychological capital. J Socio Econ 38:464–474

    Article  Google Scholar 

  • Coleman JS (1988) Social capital in the creation of human capital. Am J Sociol 94:S95–S120

    Article  Google Scholar 

  • Cull R, Demirgüç-Kunt A, Lyman T (2012) Financial inclusion and stability: what does research show? (No. CGAP Brief. Washington, DC: World Bank). Washington, DC: World Bank

  • Djankov S, La Porta R, Lopez-de-Silanes F, Shleifer A (2008) Transparency and accountability. In: Rhodes Inaugural Conference: International and Global Challenges. Rhodes Inaugural Conference: International and Global Challenges

  • Dogan E, Seker F (2016) Determinants of CO 2 emissions in the European Union: the role of renewable and non-renewable energy. Renew Energy 94:429–439

    Article  CAS  Google Scholar 

  • Dogan E, Altinoz B, Madaleno M, Taskin D (2020) The impact of renewable energy consumption to economic growth: a replication and extension of. Energy Econ 90:104866

    Article  Google Scholar 

  • Frankel JA, Romer D (1999) Does trade cause growth? Am Econ Rev 89:379–399. https://doi.org/10.1257/aer.89.3.379

    Article  Google Scholar 

  • Gagliardi L, Percoco M et al (2011) Regional disparities in Italy over the long run: the role of human capital and trade policy. Région Et Développement 33:81–105

    Google Scholar 

  • Grossman GM, Krueger AB (1995) Economic growth and the environment. Q J Econ 110:353–377. http://web.econ.ku.dk/nguyen/teaching/Grossman%20and%20Krueger%201995.pdf

  • Hannig A, Jansen S (2010) Financial inclusion and financial stability: current policy issues (No. ADBI Working Paper No. 259). ADBI Working Paper

  • Hao L-N, Umar M, Khan Z, Ali W (2021) Green growth and low carbon emission in G7 countries: how critical the network of environmental taxes, renewable energy and human capital is? Sci Total Environ 752:141853

    Article  CAS  Google Scholar 

  • Hussain S, Ahmad T, Shahzad SJH (2021) Financial inclusion and CO2 emissions in Asia: implications for environmental sustainability

  • Hussaini U, Chibuzo IC (2018) The effects of financial inclusion on poverty reduction: the moderating effects of microfinance. Int J Multidiscip Res Dev 5:188–198

    Google Scholar 

  • Iorember PT, Goshit GG, Dabwor DT (2020) Testing the nexus between renewable energy consumption and environmental quality in Nigeria: the role of broad-based financial development. Afr Dev Rev 32:163–175

    Article  Google Scholar 

  • IPA (2017) Innovation for poverty action. In: Clim. Chang. Financ. Incl

  • Isham J, Woolcock M, Pritchett L, Busby G (2005) The varieties of resource experience: natural resource export structures and the political economy of economic growth. World Bank Econ Rev 19:141–174

    Article  Google Scholar 

  • Kawase T, Kurata H (2006) Ball-, bowl-, and belt-shaped conjugated systems and their complexing abilities: exploration of the concave- convex $π$- $π$ interaction. Chem Rev 106:5250–5273

    Article  CAS  Google Scholar 

  • Khan HUR, Islam T, Yousaf SU et al (2019) The impact of financial development indicators on natural resource markets: evidence from two-step GMM estimator. Resour Policy 62:240–255

    Article  Google Scholar 

  • Khan Z, Malik MY, Latif K, Jiao Z (2020) Heterogeneous effect of eco-innovation and human capital on renewable & non-renewable energy consumption: disaggregate analysis for G-7 countries. Energy 209:118405

    Article  Google Scholar 

  • Kim D-W, Yu J-S, Hassan MK (2018) Financial inclusion and economic growth in OIC countries. Res Int Bus Financ 43:1–14

    Article  Google Scholar 

  • Knack S, Azfar O (2003) Trade intensity, country size and corruption. Econ Gov 4:1–18

    Article  Google Scholar 

  • Koenker R, Bassett G Jr (1978) Regression quantiles. Econom J Econom Soc 46:33–50

    Google Scholar 

  • Koenker R (2004) Quantile regression for longitudinal data. J Multivar Anal 91:74–89. https://doi.org/10.1016/j.jmva.2004.05.006

    Article  Google Scholar 

  • Le T-H, Chuc AT, Taghizadeh-Hesary F (2019) Financial inclusion and its impact on financial efficiency and sustainability: empirical evidence from Asia. Borsa Istanbul Rev 19:310–322

    Article  Google Scholar 

  • Le T-H, Le H-C, Taghizadeh-Hesary F (2020a) Does financial inclusion impact CO2 emissions? Evidence from Asia. Financ Res Lett 34:101451

    Article  Google Scholar 

  • Le TH, Le HC, Taghizadeh-Hesary F (2020b) Does financial inclusion impact CO2 emissions? Evidence from Asia. Financ Res Lett. https://doi.org/10.1016/j.frl.2020.101451

  • Liu Z, Li H, Hu Y, Li C (2018) Human capital structure upgrading and economic growth: a reconsideration of disparities among China’s eastern, central and western regions. Econ Res J 53:50–63

    Google Scholar 

  • Loukoianova ME, Yang Y, Guo MS et al (2018) Financial inclusion in Asia-Pacific. International Monetary Fund

  • Mahmood N, Wang Z, Hassan ST (2019) Renewable energy, economic growth, human capital, and CO 2 emission: an empirical analysis. Environ Sci Pollut Res 26:20619–20630

    Article  CAS  Google Scholar 

  • Majeed MT, Ahmad E (2008) Human capital development and FDI in developing countries

  • Martin FM, Ciovica L, Cristescu MP (2013) Implication of human capital in the development of SMEs through the ICT Adoption. Procedia Econ Financ 6:748–753

    Article  Google Scholar 

  • Mehrara M, Rezaei S, Razi DH (2015) Determinants of renewable energy consumption among ECO countries; based on Bayesian model averaging and weighted-average least square. Int Lett Soc Humanist Sci 54:96–109

    Google Scholar 

  • Mohan R (2006) Economic growth, financial deepening and financial inclusion. Reserv Bank India Bull 1305

  • Muhammad B, Khan MK (2021) Foreign direct investment inflow, economic growth, energy consumption, globalization, and carbon dioxide emission around the world. Environ Sci Pollut Res 28:55643–55654

    Article  Google Scholar 

  • Nathaniel SP, Bekun FV (2020) Environmental management amidst energy use, urbanization, trade openness, and deforestation: The Nigerian experience. J Public Aff 20:e2037

    Google Scholar 

  • Noorbakhsh F, Paloni A, Youssef A (2001) Human capital and FDI inflows to developing countries: new empirical evidence. World Dev 29:1593–1610. https://doi.org/10.1016/S0305-750X(01)00054-7

    Article  Google Scholar 

  • Noormamode S (2008) Impact of foreign direct investment on economic growth: do host country social and economic conditions matter? Available http:://www. etsg org/ETSG2008/Papers/Noormamode pdf

  • Omri A, Chaibi A et al (2014) Nuclear energy, renewable energy, and economic growth in developed and developing countries: a modelling analysis from simultaneous-equation models. Renew Sustain Energy Rev 42:1012–1022

    Article  Google Scholar 

  • Panayotou T (1997) Demystifying the environmental Kuznets curve: turning a black box into a policy tool. Environ Dev Econ 2:465–484

    Article  Google Scholar 

  • Pesaran H, Yamagata T (2008) Testing slope homogeneity in large panels. J Econom 142:50–93. https://doi.org/10.1016/j.jeconom.2007.05.010

    Article  Google Scholar 

  • Pesaran MH (2004) General diagnostic tests for cross section dependence in panels general diagnostic tests for cross section dependence in Panels. Univ Cambridge

  • Pesaran MH (2007) A simple panel unit root test in the presence of cross-section dependence. J Appl Econom 22:265–312. https://doi.org/10.1002/jae.951

    Article  Google Scholar 

  • Phelps CE (2017) Health economics. Routledge

    Book  Google Scholar 

  • Phillips PCB, Sul D (2003) Dynamic panel estimation and homogeneity testing under cross section dependence. Econom J 6:217–259. https://doi.org/10.1111/1368-423x.00108

    Article  Google Scholar 

  • Pushak T, Tiongson ER, Varoudakis A (2007) Public finance, governance, and growth in transition economies: empirical evidence from 1992–2004

  • Rehman A, Ozturk I, Zhang D (2019) The causal connection between CO2 emissions and agricultural productivity in Pakistan: empirical evidence from an autoregressive distributed lag bounds testing approach. Appl Sci 9:1692

    Article  CAS  Google Scholar 

  • Renzhi N, Baek YJ (2020) Can financial inclusion be an effective mitigation measure? Evidence from panel data analysis of the environmental Kuznets curve. Financ Res Lett 37:101725

    Article  Google Scholar 

  • Sachs JD, Warner A (1995) Natural resource abundance and economic growth. National Bureau Of Economic Research, Cambridge, MA 021381

  • Saud S, Chen S, Haseeb A et al (2020) The role of financial development and globalization in the environment: accounting ecological footprint indicators for selected one-belt-one-road initiative countries. J Clean Prod 250:119518

    Article  Google Scholar 

  • Su Y, Liu Z (2016) The impact of foreign direct investment and human capital on economic growth: evidence from Chinese cities. China Econ Rev 37:97–109

    Article  Google Scholar 

  • Subramanian A (2007) The evolution of institutions in India and its relationship with economic growth. Oxford Rev Econ Policy 23:196–220

    Article  Google Scholar 

  • Teixeira AAC, Heyuan W (2012) Is human capital relevant in attracting innovative foreign direct investment to China?Asian. J Technol Innov 20(1):83–96. https://doi.org/10.1080/19761597.2012.681436

    Article  Google Scholar 

  • Usman M, Kousar R, Makhdum MSA (2020) The role of financial development, tourism, and energy utilization in environmental deficit: evidence from 20 highest emitting economies. Environ Sci Pollut Res 27:42980–42995

    Article  Google Scholar 

  • Völlmecke D, Jindra B, Marek P (2016) FDI, human capital and income convergence—evidence for European regions. Econ Syst 40:288–307

    Article  Google Scholar 

  • Wang Z, Bui Q, Zhang B (2020) The relationship between biomass energy consumption and human development: empirical evidence from BRICS countries. Energy 194:116906. https://doi.org/10.1016/j.energy.2020.116906

    Article  Google Scholar 

  • Wegenast T, Khanna A, Schneider G (2018) The micro-foundations of the resource curse: oil ownership and local economic well-being in sub-saharan africa

  • Westerlund J (2007) Testing for error correction in panel data. Oxf Bull Econ Stat 69:709–748. https://doi.org/10.1111/j.1468-0084.2007.00477.x

    Article  Google Scholar 

  • Westerlund J, Edgerton DL (2007) A panel bootstrap cointegration test. Econ Lett. https://doi.org/10.1016/j.econlet.2007.03.003

    Article  Google Scholar 

  • Woodruff J (2019) Factors Affecting economic development and growth

  • Xing T, Jiang Q, Ma X (2017) To facilitate or curb? The role of financial development in China’s carbon emissions reduction process: a novel approach. Int J Environ Res Public Health 14:1222

    Article  CAS  Google Scholar 

  • Yildirim DÇ, Tosuner Ö (2014) The effects of FDI on human capital stock in Central Asian Turkic Republics. Eurasian J Bus Econ 7:51–60

    Article  Google Scholar 

  • Zafar MW, Saud S, Hou F (2019a) The impact of globalization and financial development on environmental quality: evidence from selected countries in the Organization for Economic Co-operation and Development (OECD). Environ Sci Pollut Res 26:13246–13262

    Article  CAS  Google Scholar 

  • Zafar MW, Zaidi SAH, Khan NR et al (2019b) The impact of natural resources, human capital, and foreign direct investment on the ecological footprint: the case of the United States. Resour Policy 63:101428. https://doi.org/10.1016/j.resourpol.2019.101428

    Article  Google Scholar 

  • Zafar MW, Shahbaz M, Sinha A et al (2020) How renewable energy consumption contribute to environmental quality? The role of education in OECD countries. J Clean Prod 268:122149. https://doi.org/10.1016/j.jclepro.2020.122149

    Article  Google Scholar 

  • Zafar MW, Saeed A, Zaidi SAH, Waheed A (2021a) The linkages among natural resources, renewable energy consumption, and environmental quality: a path toward sustainable development. Sustain Dev 29:353–362. https://doi.org/10.1002/sd.2151

    Article  Google Scholar 

  • Zafar MW, Sinha A, Ahmed Z et al (2021b) Effects of biomass energy consumption on environmental quality: the role of education and technology in Asia-Pacific Economic Cooperation countries. Renew Sustain Energy Rev 142:110868. https://doi.org/10.1016/j.rser.2021.110868

    Article  Google Scholar 

  • Zaidi SAH, Hussain M, Zaman QU (2021) Dynamic linkages between financial inclusion and carbon emissions: evidence from selected OECD countries. Resour Environ Sustain 4:100022

    Google Scholar 

  • Zameer H, Yasmeen H, Zafar MW et al (2020) Analyzing the association between innovation, economic growth, and environment: divulging the importance of FDI and trade openness in India. Environ Sci Pollut Res 27:29539–29553. https://doi.org/10.1007/s11356-020-09112-5

    Article  CAS  Google Scholar 

  • Zameer H, Wang Y, Saeed MR (2021a) Net-zero emission targets and the role of managerial environmental awareness, customer pressure, and regulatory control toward environmental performance. Bus Strateg Environ: 1–14. https://doi.org/10.1002/bse.2866

  • Zameer H, Wang Y, Vasbieva DG, Abbas Q (2021b) Exploring a pathway to carbon neutrality via reinforcing environmental performance through green process innovation, environmental orientation and green competitive advantage. J Environ Manage 296:113383. https://doi.org/10.1016/j.jenvman.2021.113383

    Article  Google Scholar 

  • Zhang X-P, Cheng X-M (2009) Energy consumption, carbon emissions, and economic growth in China. Ecol Econ 68:2706–2712

    Article  Google Scholar 

  • Zhao J, Jiang Q, Dong X, Dong K (2021) Assessing energy poverty and its effect on CO2 emissions: the case of China. Energy Econ 97:105191. https://doi.org/10.1016/j.eneco.2021.105191

    Article  Google Scholar 

  • Zhuang H (2008) Foreign direct investment and human capital accumulation in China. Int Res J Financ Econ 19:205–215

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Business School, Sanda University, Shanghai, China

    Qiang Du

  2. Finance and Economics, Guangzhou Panyu Polytechnic, Guangzhou, China

    Na Wu

  3. Commercial School, Xiangtan University, Xiangtan, China

    Fengyi Zhang

  4. Business School, Xi’an International Studies University, Xi’an, China

    Yuting Lei

  5. FSM, National University of Computer and Emerging Sciences, Lahore, Pakistan

    Asif Saeed

Authors
  1. Qiang Du
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Na Wu
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Fengyi Zhang
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Yuting Lei
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Asif Saeed
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

Qiang Du: writing original manuscript, conceptualization, writing review and editing. Na Wu: writing original manuscript, data collection. Fengyi Zhang: formal analysis, methodology, writing original manuscript, writing review and editing. Yuting Lei: reviewed, supervision, corrected mistakes, funding provision. Asif Saeed: validation, writing review and editing.

Corresponding author

Correspondence to Na Wu.

Ethics declarations

Competing interests

The authors declare no competing interests.

Additional information

Responsible Editor: Nicholas Apergis

Publisher's note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Du, Q., Wu, N., Zhang, F. et al. Impact of financial inclusion and human capital on environmental quality: evidence from emerging economies. Environ Sci Pollut Res 29, 33033–33045 (2022). https://doi.org/10.1007/s11356-021-17945-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-021-17945-x

Keywords

Search

Navigation