Environmental Determinants of Consumer Digital Financial Behavior: Evidence from Air Pollution and Financial Service Adoption During the COVID-19 Era

This study advances our understanding of the multidisciplinary connections between environmental quality, consumer behavior, and financial inclusion by investigating how environmental factors influence consumer adoption of financial services. Using comprehensive panel data spanning 123 countries from 2011–2021, we provide the first causal evidence linking air pollution to financial service adoption patterns, establishing environmental quality as a novel and economically significant determinant of global financial inclusion. This research directly addresses multiple United Nations Sustainable Development Goals (SDGs), particularly the synergies between environmental improvement (SDG 3: Good Health and Well-being; SDG 13: Climate Action), economic development (SDG 8: Decent Work and Economic Growth), and infrastructure modernization (SDG 9: Industry, Innovation and Infrastructure). MAJOR CONTRIBUTION : We bridge environmental psychology (Gifford, 2014), behavioral finance, and financial inclusion literatures by demonstrating that environmental stressors systematically influence complex economic decisions at a macro level. KEY FINDINGS : A 10 µg/m³ increase in PM2.5 air pollution reduces credit card ownership by 8–12 percentage points and digital payment adoption by 15–18 percentage points. THEORETICAL CONTRIBUTION : We extend Kim and Trusov's (2024) mood-regulating hypothesis from consumer spending to financial service adoption. POLICY SIGNIFICANCE : Meeting WHO air quality guidelines could bring approximately 1.2 billion additional consumers into formal financial markets, representing a 15% increase in global financial inclusion. This reveals critical interdependencies between SDG 13 and SDGs 1, 8, 9. METHODOLOGICAL INNOVATION : Using cross-border pollution spillovers, seasonal wind patterns, and industrial shocks as instrumental variables, we establish causality. JEL Classification: G21, Q53, O33, I15, C23