FINANCIAL INCLUSION, CARBON FOOTPRINT AND HUMAN DEVELOPMENT NEXUS: THE CASE OF TÜRKİYE

Abstract

In an era marked by increasing global challenges related to sustainability and human well-being, this research investigates the complex interrelationship between financial inclusion (FI), carbon footprint, and human development in the unique context of Türkiye. Leveraging a comprehensive dataset spanning three decades, we employ advanced econometric techniques, including the Fully Modified Ordinary Least Squares (FMOLS) and Canonical Cointegrating Regression (CCR), to shed light on this multifaceted nexus. The findings reveal that FI, as gauged by the Financial Institutions and Financial Markets, significantly contributes to Türkiye’s Human Development. Improved financial access and stability are associated with positive advancements in human development indicators over the long term. Additionally, our analysis underscores the environmental dimension, as increased carbon dioxide emissions exhibit a detrimental impact on human development. These results emphasize the importance of aligning economic progress with ecological sustainability in Türkiye’s development trajectory. By employing both FMOLS and CCR, our research enhances the comprehensiveness and robustness of the analysis. The combination of these methodologies not only elucidates the causal relationships within this intricate nexus but also offers insights into policy measures that can simultaneously foster FI, mitigate environmental degradation, and enhance human well-being in Türkiye. This study contributes to the broader discourse on sustainable development by providing empirical evidence on the interplay between FI, environmental concerns, and human development in Türkiye, ultimately advancing our understanding of the complex dynamics underpinning national development efforts in the twenty-first century.