The Relationship between Industrialization, Financial Inclusion, and Environmental Sustainability of Provinces in Java

Shaba Nada Faizza, Ris Yuwono Yudo Nugroho

Abstract


Even though data on total CO2 emissions nationally shows a decreasing trend, provincially on the island of Java, it still shows fluctuations and even tends to increase. In theory, industrialization and economic growth are the main contributors to carbon emissions and environmental degradation. In contrast, the impact of financial inclusion on environmental extinction has no context among researchers. Several studies show that financial inclusion can provide more accessible and more affordable access to financial products that help invest in green technology and environmentally friendly practices. On the other hand, it increases manufacturing activities, which can increase carbon emissions and damage the environmental ecosystem. The research examines the relationship between financial inclusion and industrialization on environmental sustainability, specifically using provincial data on the island of Java for the period 2012 to 2022. Dynamic linkage analysis is used to understand how financial inclusion and industrialization affect environmental sustainability in the longer term, in addition to helping overcome endogeneity and simultaneity problems in panel regression models so that the analysis results become more accurate and reliable

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References


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