Renewable energy, banking sector development, and carbon dioxide emissions nexus: A path toward sustainable development in South Africa

Ahmed Samour, Delani Moyo and Turgut Tursoy

Renewable Energy, 2022, vol. 193, issue C, 1032-1040

Abstract: Climate change and global warming create considerable problems for people, such as intense droughts. One of the biggest causes of global warming is the preference for fossil fuels in energy production. In this context, renewable energy has been considered an effective way to promote environmental quality. Several empirical studies have evaluated the impact of economic growth and energy on environmental quality. However, the possible influence of banking development on carbon emissions in South Africa has been ignored. Thus, this study contributes to the extant literature by assessing the impact of banking sector development on the environmental quality in South Africa over the period 1986–2017. For this purpose, the linkage between energy, economic growth, banking sector development and C02 emissions are assessed by using the new technique of bootstrap autoregressive distributed lag. The findings from the ARDL estimations affirm that renewable energy consumption affects negatively C02 emissions. However, the main conclusion of this study is that banking sector development has a negative influence on the environmental quality in South Africa through GDP and energy factors. The finding reveals that an increase in credit from banks to markets will lead to a rise in projects and investments, as well as strengthen risk management systems, potentially affecting economic growth and energy consumption and therefore increasing C02 emissions. Hence, the outcome suggests that policymakers in South Africa must use the growth of the banking sector to enhance environmental quality by promoting investment in energy and production through renewable energy.

Keywords: Banking sector development; South Africa; Bootstrap; ARDL; Energy (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:193:y:2022:i:c:p:1032-1040

DOI: 10.1016/j.renene.2022.05.013

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