Digital Financial Inclusion, CO2 Emission and High Quality Development: A Panel Data Approach from South Asian Economies
DOI:
https://doi.org/10.62843/jssr.v5i3.584Keywords:
Digital Financial Inclusion, High Quality Development Index, CO2 Emissions, Panel Data Regression, South AsiaAbstract
This study examines that relationship between the High Quality Development index (HQDI) and Digital Financial Inclusion (DFI) in nine South Asian Economies between 2013 and 2023. By using CO2 emissions as a mediating variable, it examines the direct and indirect effects of DFI on development quality. The Endogenous Growth Theory, which highlights the financial integration and technological advancement as important forces behind sustainable development, serves as the theoretical underpinning for the study. To evaluate the impact and mediating pathways, the study used the Sobel mediation analysis and fixed effects panel regression. The findings shows that DFI increases CO2 emissions and positively and significantly contributes to HQDI, suggesting a trade-off between development and environment. The relationship between DFI and HQDI founds to be mediate by CO2 emissions, indicating that although digital finance promotes growth, it also presents environmental challenges. To make the model stronger, the control variables like GDP, population growth, and the use of renewable energy also added. These findings have significant implications for policymakers who aim for a balance environmental sustainability and digital transformation. Encouraging green digital finance policies could improve the region’s high-quality development while reducing carbon risks.
References
Ali, K., Jianguo, D., Kirikkaleli, D., Mentel, G., & Altuntaş, M. (2023). Testing the role of digital financial inclusion in energy transition and diversification towards COP26 targets and sustainable development goals. Gondwana Research: International Geoscience Journal, 121, 293–306. https://doi.org/10.1016/j.gr.2023.05.006
Bloom, D. E., & Williamson, J. G. (1998). Demographic transitions and economic miracles in emerging Asia. The World Bank Economic Review, 12(3), 419–455. https://doi.org/10.1093/wber/12.3.419
Claessens, S. (2006). Access to financial services: A review of the issues and public policy objectives. The World Bank Research Observer, 21(2), 207–240. https://doi.org/10.1093/wbro/lkl004
Demirgüç-Kunt, A., Klapper, L., Singer, D., & Van Oudheusden, P. (2015). The Global Findex Database 2014: Measuring financial inclusion around the world. World Bank.
GSMA. (2022). State of the Industry Report on Mobile Money 2022. GSM Association.
IRENA. (2023). World Energy Transitions Outlook 2023: 1.5°C Pathway. International Renewable Energy Agency.
Jack, W., & Suri, T. (2011). Mobile money: The economics of M-PESA. NBER Working Paper No. 16721.
Jansen, A., Wang, R., Behrens, P., & Hoekstra, R. (2024). Beyond GDP: a review and conceptual framework for measuring sustainable and inclusive wellbeing. The Lancet. Planetary Health, 8(9), e695–e705. https://doi.org/10.1016/S2542-5196(24)00147-5
Le, V. L. T., & Pham, K. D. (2024). The impact of financial inclusion and digitalization on CO₂ emissions: A cross-country empirical analysis. Sustainability, 16(23), 10491. https://doi.org/10.3390/su162310491
Lin, B., & Wang, X. (2021). Examining the impact of urbanization and industrialization on CO₂ emissions: A panel analysis. Environmental Science and Pollution Research, 28(5), 5945–5958.
Liu, Y., Li, Y., & Li, M. (2023). Digital financial inclusion and sustainable development: Evidence from emerging economies. Sustainable Development, 31(1), 148–163.
Pata, S. K., & Pata, U. K. (2024). Comparative analysis of the impacts of solar, wind, biofuels and hydropower on load capacity factor and sustainable development index. Energy, 319, 134991. https://doi.org/10.1016/j.energy.2025.134991
Preacher, K. J., & Hayes, A. F. (2004). SPSS and SAS procedures for estimating indirect effects in simple mediation models. Behavior Research Methods, Instruments, & Computers: A Journal of the Psychonomic Society, Inc, 36(4), 717–731. https://doi.org/10.3758/bf03206553
Quoc, H. N., Le Quoc, D., & Van, H. N. (2024). Assessing digital financial inclusion and financial crises: The role of financial development in shielding against shocks. Heliyon, 11(1).
Romer, P. M. (1990). Endogenous Technological Change. The Journal of Political Economy, 98(5, Part 2), S71–S102. https://doi.org/10.1086/261725
Sadiq, M., & Ali, N. (2024). Digital financial inclusion and environmental sustainability nexus: Evidence from South Asian economies. Pakistan Journal of Commerce and Social Sciences, 18(1), 134. https://doi.org/10.64534/commer.2024.056
Sadorsky, P. (2023). Digital finance, carbon emissions and the role of renewable energy: Evidence from G20 economies. Energy Economics, 117.
Sarma, M., & Pais, J. (2011). Financial inclusion and development. Journal of International Development, 23(5), 613–628. https://doi.org/10.1002/jid.1698
Schumpeter, J. A. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Harvard University Press.
Sen, A. (1999). Development as Freedom. Oxford University Press.
Shahzad, S. J. H., Zakaria, M., & Rehman, M. U. (2024). Digital financial inclusion and green innovation in South Asia: Evidence from a panel data approach. Environmental Science and Pollution Research, 31, 1–19.
Stern, N. (2007). The Economics of Climate Change: The Stern Review. Cambridge University Press.
Stiglitz, J. E., Sen, A., & Fitoussi, J. P. (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. OECD.
UNDP. (2022). Human Development Report 2022: Uncertain Times, Unsettled Lives – Shaping Our Future in a Transforming World. United Nations Development Programme.
Van, H. N., Quoc, H. N., & Le Quoc, D. (2025). The role of green credit in promoting sustainable development in vietnam: evidence from quantile-ON-quantile regression. Research on World Agricultural Economy, 88-99.
World Bank. (2021). Global Findex Database 2021: Measuring financial inclusion and the fintech revolution.
Xi, W., & Wang, Y. (2023). Digital financial inclusion and high-quality economic development: Evidence from China. Heliyon, 9.
Zhang, B., Bi, J., Fan, Z., & Wang, Y. (2022). Digital finance, carbon neutrality, and sustainable economic development: A coordinated path. Environmental Science and Pollution Research, 29, 5131–5147.
Zhang, Y., Wang, C., & Liu, X. (2022). Green finance, digital innovation, and environmental performance. Journal of Cleaner Production, 340.
Zhou, X. (2010). High-quality development and innovation-driven strategy. Chinese Journal of Population Resources and Environment, 8(3), 3–9.
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Copyright in the Journal of Social Sciences Review is retained by the author(s). Authors also grant any third party the right to use the article freely as long as its integrity is maintained and its original authors, citation details and publisher are identified.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
SSR's Editorial Board shares the vision of providing free access to information, education, and science for everyone, thus promoting its content through an OPEN ACCESS POLICY, fulfilling the DOAJ definition of open access. The JSSR adheres to an Open Access and Copyright Licensing Policy based on the belief that making research freely accessible to the public promotes greater global knowledge sharing.
The JSSR uses the Creative Commons Attribution-NonCommercial 4.0 International License. The authors who apply and publish in JSSR consent to abide by the copyright policy set out in the Creative Commons 4.0 license (Attribution-NonCommercial 4.0 International license).
- Copyright in the Journal of Social Sciences Review is retained by the author(s).
- Authors also grant any third party the right to use the article freely as long as its integrity is maintained and its original authors, citation details and publisher are identified.
While "By 'open access' to this literature, we mean its free availability on the public internet, permitting any users to read, download, copy, distribute, print, search, or link to the full texts of these articles, crawl them for indexing, pass them as data to software, or use them for any other lawful purpose, without financial, legal, or technical barriers other than those inseparable from gaining access to the internet itself."
