A panel data method towards the effectiveness of sources of finance in stimulating the realisation of renewable energy technologies: Empirical evidence for Asia‐Pacific

Farah Roslan, Borhan Abdullah and Mohd Khairul Amri Kamarudin

Australian Economic Papers, 2023, vol. 62, issue 4, 693-722

Abstract: Many nations have taken steps to encourage renewables through environmental policy frameworks; however, they still account for a small portion of global power output. This fact suggests that there are still some gaps between the potential advantages of renewables and their implementation, and these gaps must be investigated. Thus, the present study examines the effect of finance for the expansion of renewable energy technologies (RETs) by empirically assessing the sources of finance in facilitating the expansion of RETs on four renewable energy sectors; hydroelectric, biomass, solar photovoltaic and wind. This study applies a fixed effects estimator with Driscoll–Kraay standard errors on private and public sources of finance (financial market, banking sector and public debt) in selected Asia‐Pacific countries between 1998 and 2016. This study has shown that not all sources of finance have the same effect on the clean‐energy sector. The financial market plays a critical role in supplying financial capital for risky and uncertain technologies that require a high degree of financing, which could be particularly helpful for technology deployment in high‐tech industries. Investigations into the effectiveness of source of finance for RETs also indicate that banks discourage their deployment of RETs in the Asia‐Pacific.

Date: 2023
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