Institutional quality and clean energy transition: nonlinear moderating role of financial inclusion

This paper examines the nonlinear moderating effect of financial inclusion within the relationship between institutional quality and clean energy transition. Using data from 191 countries over the period 1996–2022, we observe that financial inclusion has an inverted U-shaped moderating effect within the relationship between institutional quality and clean energy transition. Government effectiveness and political stability emerge as the most influential dimensions of institutional quality. Countries with weak institutions should focus on improving government effectiveness and political stability to promote the transition to renewable energy. However, financial inclusion in the institutional quality-clean energy transition context appears subject to diminishing returns.