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Accepted Paper
Climate change adaptation strategy and inclusive development in Africa: Analysing the threshold effect of banking services and environmental taxes
Mohammed Amidu
(University of Ghana Business School)
Ernest Yaw Tweneboh-Koduah
(University of Ghana Business School)
This study examines whether the inclusive development effect of climate change adaptation is contingent on the level of environmental taxes and banking services prevalent in Africa. The study adopts the more refined and more appropriate dynamic threshold panel: nonlinear asymmetric dynamics and cross-sectional heterogeneity simultaneously in a dynamic threshold panel data framework. The results show that firstly, the impact of climate change adaptation on inclusive development is positive and statistically significant only above a certain threshold level of environmental taxes. Below that threshold, the effect is rather negative. Secondly, there is also a threshold effect of banking services, thus the climate change adaptation effect on inclusive development is positive under both below and above the threshold but only significantly above the threshold. The findings suggest that the climate change adaptation-inclusive development nexus is contingent on the level of environmental taxes and banking services. In spite of our study being seminal in simultaneously examining the roles of environmental taxes and banking services, it contrasts prior research utilizing the linear interaction model with predetermined conditional constraints.