The Impact of Financial Development on Renewable Energy Consumption: A Multidimensional Analysis Based on Global Panel Data

In this paper, we examined the impact of financial development on renewable energy consumption from a global perspective based on a dynamic panel model and panel data of 103 economies. We conducted the research from the different levels of financial development using an index system including nine variables, and also explored national heterogeneity by dividing samples into developed economies and developing economies. The empirical results indicated that the financial development had a positive impact on renewable energy consumption from the macro perspective, and this effect was mainly driven by the development of a financial institution (mainly including bank). Further analysis on the depth, access, and efficiency of a financial institution and financial market (mainly including stock market and bond market) revealed that all three aspects of a financial institution had a positive influence on renewable energy consumption, while this effect only existed in the aspect of efficiency for a financial market. The investigation of national heterogeneity showed that the financial development performed well in promoting renewable energy consumption in developed economies, while this positive effect only existed for financial institutions in developing economies. We suggest to policymakers to attach importance to the positive effect of financial development when formulating renewable-energy-related policies, and provide a system guarantee for renewable energy enterprises concerning financial sectors in developing economies.