Panel study reveals mixed impacts of renewable energy financing on financial systems across 33 emerging economies, highlighting the moderating role of institutional quality.
Key Points
To evaluate the impact of renewable energy financing on financial development, financial markets, and financial institutions across emerging economies.
Analyzed macroeconomic panel data across 33 emerging economies spanning 2000 to 2022.
Employed the Generalized Method of Moments (GMM) approach to account for endogeneity and applied Granger causality testing to evaluate directional effects.
Renewable energy financing positively influenced financial markets but exerted an overall detrimental effect on financial institutions and total financial development.
Regional variations showed a significant negative impact on financial development in Asia, compared to a positive but statistically insignificant impact in Africa.
Institutional quality significantly moderated these relationships, reducing adverse impacts on institutions and overall development while reinforcing market-level gains.