Nexus of digital financial service adoption, decent work and environmental sustainability: results from SEM-NCA approaches

Abstract With growing global attention on sustainability, financial inclusion, and decent work, there remains a gap in understanding how financial literacy, access to capital, and digital payment usage impact both decent work and environmental sustainability, particularly in the context of developing economies. Existing research also overlooks the mediating role of decent work in bridging these factors with environmental sustainability. A sample of 384 valid responses was collected using convenience sampling from digital financial service users and providers. The data were analyzed using PLS-SEM to examine the direct and indirect relationships between the variables, and NCA was employed to assess the robustness and necessity of these factors in achieving decent work and environmental sustainability. The results show that financial literacy, access to capital, and digital payment usage positively affect both decent work and environmental sustainability. Moreover, decent work mediates the relationship between these financial inclusion factors and environmental sustainability, demonstrating its crucial role in achieving sustainable outcomes. The study contributes to the theoretical literature by integrating Capability Approach, Institutional Theory, and Stakeholder Theory to explain how financial inclusion and decent work contribute to environmental sustainability. This multi-theory framework enhances the understanding of the mechanisms through which financial inclusion influences sustainable development. This study adds value to the literature by extending financial inclusion research on decent work, environmental sustainability, and introducing mediating role of decent work in these relationships. The findings of this study provide valuable insights for policymakers to design inclusive financial strategies that promote decent work and foster environmental sustainability, contributing to broader development goals.