Quantifying the asymmetric and dependence structure between financial inclusion and energy efficiency: evidence from quantile methods

Abstract

Improving energy efficiency is one of the most effective ways to combat climate change and global warming. Financial inclusion can facilitate the financing of energy-efficient technologies and environmental awareness programs. In this context, this study aims to investigate the asymmetric and causal relationships between financial inclusion and energy efficiency in the ten most energy-efficient countries over the period 1980q1–2018q4. For this purpose, the quantile-on-quantile approach, quantile regression, and quantile Granger causality test are applied in this study. The findings demonstrate that financial inclusion has a negative impact on energy intensity across all quantiles. Energy intensity also reduces financial inclusion. However, this effect is attenuated at higher quantiles. Moreover, all countries have bidirectional causality between financial inclusion and energy efficiency. Given these results, the study suggests that financial inclusion is an important determinant of energy efficiency and that financial conditions should be considered when implementing energy policies. This study will be conducive for policymakers to implement financial development strategies for investing in clean technologies to increase energy efficiency and solve environmental issues.