The impact of digital financial inclusion on carbon dioxide emissions

Abstract

This study aims to discuss the impact of digital financial inclusion on carbon dioxide emissions using a sample of 14 countries in the Middle East and North Africa (MENA) region during the period from 2004 to 2021. The study constructs a digital financial inclusion index using Principal Component Analysis (PCA). Additionally, the STIRPAT model is adapted to incorporate the study variables. To analyze the long-term effects between these variables, this study used the CS-ARDL model, which provides more reliable results. The results indicate an inverse relationship between digital financial inclusion and carbon dioxide emissions. In contrast, a cyclical relationship is observed between energy consumption and carbon dioxide emissions. Gross domestic product (GDP) did not have a direct impact on CO2 emissions. This analysis reflects the complexity of the economic and environmental impact on carbon dioxide emissions in the MENA region. The study recommends the necessity of developing sustainable policies aimed at reducing CO2 emissions in the region and promoting environmental and economic sustainability.