THE FINANCIAL INCLUSION, RENEWABLE ENERGY AND CO2 EMISSIONS NEXUS IN THE BRICS NATIONS: NEW EVIDENCE BASED ON THE METHOD OF MOMENTS QUANTILE REGRESSION

Abstract

This paper aims to examine the nexus between financial inclusion, renewable and non-renewable energy consumption, and carbon emissions according to the Environmental Kuznets Curve (EKC) hypothesis in the BRICS nations, employing the Method of Moments Quantile Regression (M.M.Q.R.) approach for 2002-2019. The causal linkages among the tested variables in heterogeneous panel data are investigated by utilising the Dumitrescu and Hurlin test. The empirical outcomes validate the EKC hypothesis for the BRICS nations. Furthermore, the findings from the panel quantile estimations (M.M.Q.R.) showed that the coefficients for the consumption of renewable energy and financial inclusion are negative through all quantiles (1st to 9th quantiles) for the emissions of CO2. Thus, this suggests CO2 emission levels are reduced by financial inclusion and renewable energy. In addition, the current analysis indicates that the volume of renewable energy investment in overall energy improves due to economic enlargement in the BRICS economies. Hence, financial inclusion is a catalyst for growth while mitigating carbon emissions. Therefore, financial inclusion should be included in the climate change paradigm strategies of the BRICS countries. To reach sustainable economic growth, we conclude that policy-makers should improve incentives for inclusive green finance.