Harmonizing sustainable Horizons: Deciphering the intricate nexus between disaggregated financial inclusion and clean energy transition in BRICS economies

Abstract

This study emphasizes the acceleration of clean energy (CE) adoption through financial inclusion (FI), particularly in the context of the rapid expansion of the BRICS economic cooperation alliance and its contribution to addressing environmental challenges. Specifically, this research assesses the impact of FI on the upward mobility of clean energy transition using annual panel data from 2004 to 2022. Utilizing a comprehensive set of pre-estimation techniques, this study employs the newly established Panel non-linear Autoregressive Distributed Lag (P-NARDL) model for empirical analysis, supplemented by robust estimation methods. The findings reveal that various dimensions of FI, including financial accessibility, financial depth, financial efficiency, and financial stability, significantly influence the progression from nonrenewable energy sources to clean energy consumption. This study extends the examination to assess both the aggregate and disaggregated relationships among the variables. Using causality estimation, it identifies the presence of both bidirectional and unidirectional causality between the FI indices and CE. These findings offer practical policy implications for developing financial resources to accelerate the adoption of CE, thereby addressing the environmental challenges faced by the BRICS economies.