The global impact of financial development on renewable energy in a panel structural vector autoregression analysis

Financial development is likely to benefit the use of renewable energies, particularly those lacking environmental conditions and significant external capital. However, the impact of financial development on alternative renewable energy sources has yet to be documented in different income‐level countries. Using a unique panel data set of 62 countries with three income levels for the 2000–2019 period, we investigate how financial development impacts renewable energy on a global scale by using a panel structural vector autoregression analysis (PSVAR). Our empirical findings indicate that financial development significantly affects renewable energy installment and consumption, while FDI takes a negative impact on SOL sources. We further find that wind energy source to financial development shock exhibits a higher impact in high‐income countries. Our findings provide new insights concerning renewable energy in different countries using the PSVAR model, which may inspire scholars interested in this research field.