How financial inclusion affects the collaborative reduction of pollutant and carbon emissions: The case of China

To explore whether financial inclusion affects the collaborative reduction of pollutant and carbon emissions, we analyze the impact of financial inclusion on these emissions using a sample of 30 Chinese provinces from 2011 to 2017. This study further discusses the impact of financial inclusion in terms of asymmetry, heterogeneity, and the mediating mechanism. Our empirical results reveal that financial inclusion achieves the collaborative reduction of pollutant and carbon emissions. This further proves the negative impact of financial inclusion on pollutant emissions, which is universal in different geographical locations with different levels of pollution. The impact of financial inclusion on carbon emissions is asymmetric and varies geographically. Increasing financial inclusion has an indirect impact on the collaborative reduction of pollutant and carbon emissions through the energy consumption effect and the energy structure effect. Besides, increased financial inclusion may reduce carbon emissions by improving the renewable energy sector. Furthermore, the direct effect of financial inclusion on carbon emissions is insignificant. Accordingly, financial inclusion should be considered a priority in China's provincial and national development strategies because of its usefulness in promoting the collaborative reduction of pollutant and carbon emissions. •Impact of financial inclusion on China's pollutant and carbon emissions is explored.•Asymmetry, heterogeneity, and mediating mechanism are further analyzed.•Increasing financial inclusion can collaboratively reduce pollutant and CO2 emissions.•The impact of financial inclusion on CO2 emissions is asymmetric and heterogeneous.•The energy consumption and energy structure effect are two effective mediators.