Financial inclusion and green technological innovation as drivers of human capital: Evidence from E7 countries

The acceleration of green technological innovation is an important strategy to sustain economic and human development. Prior studies focus on the financial inclusion-human capital linkage but overlook the role of green technological innovation within the financial inclusion-human capital framework. This study bridges this gap by examining the influence of financial inclusion on human capital by considering the role of green technological innovation. We use panel data from seven emerging (E7) countries, namely Brazil, China, India, Indonesia, Mexico, Russia, and Turkey, from 2004 to 2021. We selected these nations due to their rapidly evolving financial ecosystems and urgent sustainability challenges. We adopted the Method of Moments Quantile Regression (MMQR) approach, which captures heterogeneous effects across quantiles to analyze the heterogeneous relationship among the selected variables. The outcomes state that financial inclusion promotes human capital across all quantiles. Likewise, the outcomes show that green technological innovation positively and significantly affects human capital across low, medium, and high quantiles. Additionally, the robustness check study is supported by parametric methods, including FMOLS and CCR regression. Furthermore, using the Dumitrescu–Hurlin technique, the study finds a bidirectional causality between technological innovation and human capital and a bidirectional causality between technological innovation and financial inclusion. Based on these findings, the study suggests helpful lessons for top emerging economies in stimulating human capital via green technological innovation and financial inclusion channels. Key policy recommendations include investing in green technology education and skills training; and promoting green bonds and green technology entrepreneurship by providing support and resources, which can all strengthen human capital.