Can Digital Financial Inclusion Promote Green Energy Innovation? An International Evidence

ABSTRACT The digitalization of financial services has led to a more developed and inclusive financial sector. Digital financial services make transactions simpler and quicker, making it easier to invest in energy projects. However, not much empirical evidence is available to support the above claims. To plug this gap in the current body of literature, the primary objective of the analysis is to investigate the influence of digital financial inclusion on green energy innovations across different regions of the world, including Asia, America, and Europe, by employing the two‐stage least squares (2SLS) and generalized method of moments (GMM) methods. The study's key findings highlight that digital financial inclusion positively affects green energy innovations in the full sample, Europe, and Asia. At a disaggregate level, bank branches, debit, and ATMs favorably influence green energy innovations in the full sample, Europe, and America. Among the control variables, national income, R&D spending, and carbon emissions positively impact green energy innovations in most models and thus emerge as important determinants of green energy innovations. Consequently, increases in digital financial inclusion are required to successfully attain projected growth rates of green energy and build a green finance development model that can support green energy innovations.