Title: The relationship between financial development and renewable energy consumption: an empirical investigation on emerging countries

Authors: Bertac Sakir Sahin; Semih Yilmazer

Addresses: Department of Business Administration, Yildiz Technical University, 34220, Esenler, Istanbul, Turkey ' Department of Business Administration, Yildiz Technical University, 34220, Esenler, Istanbul, Turkey

Abstract: This paper examines the impact of financial development on renewable energy consumption in seven emerging and growth-leading economies from 2001 to 2015. We include some financial development factors such as domestic credit to the private sector, stock market capitalisation, and financial deposits in our linear regression model. Also, we estimate the fixed effects model with feasible generalised least squares (FGLS) based on the Parks-Kmenta method. The results indicate a positive and statistically significant relationship between domestic credit to the private sector and renewable energy consumption. We also find that the effect of stock market capitalisation is positive on renewable energy consumption. Nevertheless, our findings show that financial system deposits do not significantly impact renewable energy consumption. We also include various control variables and conclude that increases in foreign direct investments and urban population negatively affect renewable energy consumption. Considering these results, we evaluate the energy policies of the selected countries.

Keywords: renewable energy consumption; financial development; emerging market countries.

DOI: 10.1504/IJSE.2021.118619

International Journal of Sustainable Economy, 2021 Vol.13 No.4, pp.336 - 356

Received: 09 Jan 2021
Accepted: 07 Apr 2021
Published online: 29 Oct 2021 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article