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The asymmetric effect of green investment, natural resources, and growth on financial inclusion in China

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  • Pang, Deliang
  • Li, Kuangzhe
  • Wang, Gang
  • Ajaz, Tahseen

Abstract

The financial system plays a significant role in subsidizing an economy's adaption to environmental challenges and promoting its resilience to ecological perils in the context of financial needs. So, researchers have shifted their efforts to exploring financial development as a mitigating factor of environmental deprivation. In a similar context, the current study examines the role of green investment and natural resource rent in boosting Financial Inclusion (FI) in China from the period of 1990-to 2018. In compliance, a novel empirical estimation technique popularised, the “quantile autoregressive distributed lag” (QARDL) model, is used to assess the influence of green investment (GIN) and natural resource rent (NRR), and per capita income on the financial inclusion for China. We have used the QARDL model to overcome the drawbacks of using any conventional model such as the ARDL model. In addition, it will give us a robust approach and in-depth analysis of the issue under discussion. According to the empirical findings, green investment is positively and significantly associated with financial inclusion throughout the quantiles in the long run. Natural resource rent exerts a positive and significant influence on financial inclusion in higher quantiles in the long run. In addition, the per capita income significantly increases the financial inclusion at all quantiles. The empirical analysis explored the bi-directional causality in the selected variables. According to current empirical results, green investment and natural resource rent are the two most influential factors in boosting financial inclusion in the case of China. Hence, policies should be made on initiating new projects, green investment, and promoting natural resource rent-seeking attitude by mitigating the misuse of natural resources and refining the prevailing natural resource tax laws in China.

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  • Pang, Deliang & Li, Kuangzhe & Wang, Gang & Ajaz, Tahseen, 2022. "The asymmetric effect of green investment, natural resources, and growth on financial inclusion in China," Resources Policy, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:jrpoli:v:78:y:2022:i:c:s0301420722003300
    DOI: 10.1016/j.resourpol.2022.102885
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