Uncovering the Effect of Financial Globalization and Technological Innovation on Renewable Energy Consumption in Nigeria: An ARDL and Frequency Domain Causality Approach

In recent times, countries have made it a point of duty to promote economic activities that will foster a sustainable environment following the Sustainable Development Goals (SDGs). One of the measures employed to achieve these goals, especially SDGs 7 and 13, is the adoption of renewable energy consumption. As a result, this research investigates the effect of financial globalization (FGLO) and technological innovation (TECH) on renewable energy consumption (RENC) in Nigeria from 1990 to 2020 using the Autoregressive Distributed Lag (ARDL) model. In addition, this research contributes to the existing literature by employing the Frequency Domain Causality Approach to capture long- and short-run causal relationships. Also, control variables such as financial development (FIND) and economic growth (GDP) were employed. The ARDL result is as follows: (1) The bounds test confirms a long-run association between the variables. (2) In the long-run, TECH and FIND spur RENC, while GDP reduces RENC. In addition, FGLO has a positive long-run coefficient, but the evidence is not strong enough to claim a clear long-run effect. (3) In the short-run, FGLO and FIND increase RENC, while GDP reduces RENC. Furthermore, the Frequency Domain Causality results confirm that TECH Granger causes RENC in the medium and long term, FIND Granger causes RENC in the medium and long term, while GDP Granger causes RENC in the short, medium, and long term. Based on these results, policies are recommended.