Does financial inclusion promote a green economic system? Evaluating the role of energy efficiency

Figures & data

Table 1. Nomenclature of variables and sources.

Variables	Description	Sources
Consumption-based carbon emissions (CCO2)	It is equal to territory-based consumption subtracting carbon emissions embodied in exports plus carbon emissions embodied in imports (measured$\mathrm{ }in\mathrm{ }{\mathit{mtCO}}_2$)	Global carbon Atlas (2020)
Financial inclusion (FINC)	The financial inclusion index is calculated using different variables such as Institutions of commercial banks, Branches of commercial banks, Outstanding deposits with commercial banks (% of GDP), Numbers of ATMs per 100,000 adults, and outstanding loans from commercial banks (% GDP).	IMF 2020
Energy Efficiency (ENEF)	GDP per unit of energy usage ($/kg)	World Bank 2020
Exports (EX)	Exports of goods and services were measured at constant 2010 US dollars (% of GDP).	World Bank 2020
Imports (IM)	Imports of goods and services were measured at constant 2010 US dollars (% of GDP).	World Bank 2020
Gross Domestic Product (GDP)	Gross value added by all resident producers in the economy, plus any product taxes, minus any subsidies not included in the product value (Constant US dollars 2010).	World Bank 2020
Financial Development (FD)	This refers to financial resources delivered to the private sector by financial corporations, such as loans, non-equity securities purchases, trade credits, and other accounts receivable that establish a claim for repayment (% of GDP).	World Bank 2020
Foreign Direct Investment (FDI)	These are the net inflows of funds for long-term management interest. It is the total of reinvested earnings, short and long-term capital provided in the balance of payment, and equity capital (% of GDP).	World Bank 2020
Renewable Energy Consumption (REC)	The proportion of renewable energy in total final energy consumption is called renewable energy consumption (% of total final energy consumption).	World Bank 2020
Renewable Electricity output (RELO)	The percentage of electricity generated by renewable power plants in total electricity generated by all types of plants is known as renewable electricity (% of total electricity output).	World Bank 2020
Electricity Production from Renewable Sources (ELERE)	Electrical power production from sustainable resources, leaving out hydroelectric, consists of geothermal, solar, trends, wind, biomass, as well as biofuels (kwh).	World Bank 2020

Table 2. Slope heterogeneity and cross-section dependence.

Homogenous/Heterogeneous Slope Coefficient Testing
$\stackrel{\sim }{\Delta }$		${\stackrel{\sim }{\Delta }}^{\mathrm{Ajusted}}$
10.464***		11.893***
Pesaran (2004) Cross-Section Dependence Test
CCO2	EX	IM	GDP
11.744***	8.084***	6.803***	16.08***
FINC	ENEF	–	–
6.169***	17.015***	–	–

Note: The levels of significance are *** 1%, ** 5% and * 10%.

Source: Authors.

Table 3. Unit root testing.

Variable(s)	$\text{Trend and Intercept}$		$\text{Order of Integration}$
	$\mathrm{I}(0)$	$\mathrm{I}(1)$
CCO2	−2.417	−4.880***	I(1)
EX	−2.892**	–	I(0)
IM	−3.102***	–	I(0)
GDP	−1.438	−2.743*	I(1)
FINC	−2.076	−3.777***	I(1)
ENEF	−2.741*	–	I(0)

Note: The levels of significance are *** 1%, ** 5% and * 10%.

Source: Authors.

Table 4. Cointegration test.

Statistic	${\mathrm{G}}^{\mathrm{t}}$	${\mathrm{G}}^{\mathrm{a}}$	${\mathrm{P}}^{\mathrm{t}}$	${\mathrm{P}}^{\mathrm{a}}$
Values	−8.659***	−16.421***	−27.803***	−17.318***
p-values	0.000	0.000	0.000	0.005

Note: The levels of significance are *** 1%, ** 5% and * 10%.

Source: Authors.

Table 5. Outcomes of CS-ARDL.

$\mathrm{Short}-\text{Run Coefficients}$
$\mathrm{Variables}$	$\mathrm{Coefficients}$	$\text{Standard Errors}$	$\mathrm{Z}-\mathrm{Statistics}$	$\mathrm{Signs}$
$\Delta$ EX	−0.451***	0.096	−4.69	$<0$
$\Delta$ IM	0.349***	0.092	3.76	$>0$
$\Delta$ GDP	0.356***	0.112	3.17	$>0$
$\Delta$ ENEF	−0.211***	0.041	−5.08	$<0$
$\Delta$ FINC	0.0431*	0.025	1.68	$>0$
ECM(-1)	−0.743***	0.115	−6.43	$<0$
$\mathrm{Long}-\text{Run Coefficients}$
EX	−0.634***	0.155	−4.08	$<0$
IM	0.362***	0.125	2.89	$>0$
GDP	0.464***	0.164	2.82	$>0$
ENEF	−0.360***	0.038	−9.47	$<0$
FINC	0.0651*	0.035	1.81	$>0$

Note: The levels of significance are *** 1%, ** 5% and * 10%.

Source: Authors.

Table 6. Robustness results.

Variable(s)	CoefficientsAMG	CoefficientsCCMG
EX	−0.331***	−0.339***
IM	0.221***	0.164***
GDP	0.592***	0.761***
ENEF	−0.327***	−0.395***
FINC	0.0212***	0.055***
Constant	−1.013***	−1.074***

Note: The levels of significance are *** 1%, ** 5% and * 10%.

Source: Authors.

Table 7. What if analysis using various variables.

Variables	Model 1	Model 2	Model 3	Model 4	Model 5
EX	−0.37***	−0.31***	−0.33***	−0.27***	−0.29***
IM	0.18***	0.13***	0.11***	0.14***	0.12***
GDP	0.70***	0.62***	0.51***	0.55***	0.57***
FD	−0.15***	–	–	–	–
FDI	–	−0.01***	–	–	–
REC	–	–	−0.40***	–	–
RELO	–	–	–	−0.11***	–
ELERE	–	–	–	–	0.01***

Note: The levels of significance are *** 1%, ** 5% and * 10%.

Source: Authors.

Pesaran, H. M. 2004. General diagnostic tests for cross-sectional dependence in panels. University of Cambridge, Cambridge Working Papers in Economics 435.

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