PurposeThe present study tries to examine the relationship between financial inclusion and environmental quality as proxied by carbon emissions in India covering the period from 2008 to 2018.Design/methodology/approachA financial inclusion index has been composed using principal component analysis (PCA) based on three dimensions: access, penetration and usage. After testing for stationarity of the data, the authors adopted the autoregressive distributive lag model (ARDL) methodology.FindingsThe study found that financial inclusion and growth lead to increased carbon emissions in India and the government must resort to greener policies, whereas empirical results support that globalization reduced the pollutants emissions in both the long term and short period in India.Practical implicationsBased on the results, several policy prescriptions are rendered for policymakers: (1) need to move toward greener energy policies and (2) enhance the awareness of green financing instruments such as green bonds in India. Therefore, policymakers should be more proactive in accepting green and sustainable financial alternatives.Originality/valueThe present study contributes to the scant literature on the financial inclusion–emission nexus in India. This study considers three inclusion parameters that are not present in previous studies.
Sustainability Indices serve as a benchmark for the companies screened for their superior performance on environmental, social and governance (ESG) parameters. This article intends to compare the overall and regime-specific financial performance of socially responsible indices of the National Stock Exchange, Nifty100 ESG and Nifty100 ESG Enhanced with Nifty50 (representing the market) from 1 April 2012 to 31 March 2020. Overall comparative performance analysis of these indices is conducted using risk-adjusted return measures and volatility has been captured through the TGARCH model. Further, time duration has been decomposed into regimes using Markov Regime Switching Model and the comparison of indices has been undertaken in both regimes. Our findings suggest that there is no significant difference between the return performance of sustainability indices and market benchmark index in single time duration and sustainability indices performing marginally better in both the regimes identified. This implies that socially responsible investments in India are providing reasonable returns to investors without comprising non-financial objectives. For corporates, it is a win–win situation to focus on ESG parameters to attract capital from investors and deliver better corporate financial performance and hence increasing the potential of growth of socially responsible investing in India.
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