Nexus between Environmental Degradation, Clean Energy, Financial Inclusion, and Poverty: Evidence with DSUR, CUP-FM, and CUP-BC Estimation

Abstract

This research delves into the intricate interconnections among financial inclusion, the adoption of renewable energy, environmental resilience, and poverty reduction in low-income countries (LICs), lower-middle-income countries (LMICs), and sub-Saharan Africa (SSA), in light of complex issues such as poverty, environmental degradation, and sustainable development. This work comprehensively understands the interaction between these crucial factors by utilizing a dynamic panel model, specifically Dynamic Seemingly Unrelated Regression (DSUR), CUP-FM, and CUP-BC. The empirical analysis conducted in our study has produced findings that are both significant and noteworthy. Financial inclusion pertains to facilitating formal financial services for demographic segments that have historically been marginalized or excluded. A negative relationship between financial inclusion and poverty levels in low-income countries (LICs), lower-middle-income countries (LMICs), and sub-Saharan Africa (SSA) has been observed. Moreover, there is an inverse correlation between the utilization of renewable energy sources and poverty, indicating that the utilization of renewable energy sources possesses the potential to catalyze the enhancement of economic conditions and overall welfare. However, it is important to note that the correlation between environmental deterioration and poverty underscores the urgent necessity for implementing comprehensive policies that address sustainability and poverty reduction. The results above shed light on the potential for governmental interventions to promote positive transformations. Improving endeavors to achieve financial inclusion holds the capacity to empower individuals and businesses alike, fostering economic progress and alleviating poverty. Renewable energy technology is progressively acknowledged as a viable strategy to promote economic advancement and tackle environmental issues simultaneously. It is of utmost importance to establish comprehensive policy frameworks that effectively tackle the intricate interplay between environmental degradation and poverty to create a future that is both sustainable and egalitarian.