Impact of financial inclusion and human capital on environmental quality: evidence from emerging economies.

Emerging nations have recorded significant economic development over the last few decades, which has increased natural resources extraction and consumption. On account of rising development, the financial sectors of these nations are continuously expanding their services and products. These countries are also experiencing increasing environmental deterioration which requires raising the level of environmental awareness and seeking different mitigation options. Against this backdrop, this research studies the role of financial inclusion and human capital in the environmental quality of emerging nations. To do so, the panel data from 2004 to 2019 is collected and second-generation econometric methodologies are utilized to analyze the data. Controlling remittances, economic growth, and natural resources, the study revealed cointegration among variables. The results of the panel quantile regression indicated that financial inclusion improves the environmental quality of emerging countries as it is negatively connected with CO2. However, human capital in these nations adds to environmental deterioration. Likewise, natural resources and economic growth raise CO2, and therefore, reduce environmental quality. Apart from this, remittances are playing a critical role in reducing CO2. After this, the research utilized the Cup-FM and Cup-BC methods and noticed a similar association among variables. Lastly, policy implications of these findings are discussed.