Dynamic relationship between stock markets and renewable energy development: Evidence from cross-country data

Yi-Lang Luo, Wen-Bo Li and Xuesheng Chen

Economic Analysis and Policy, 2025, vol. 87, issue C, 1262-1274

Abstract: Against the backdrop of global efforts to combat climate change and promote energy transition, the development of renewable energy has become a key path to achieving sustainable development. Based on cross-country data from 60 countries spanning 2001 to 2021, this study employs fixed effects and quantile regression methods to systematically examine the impact of stock markets on renewable energy development and its dynamic evolution. The findings reveal that stock market development has a statistically significant positive effect on renewable energy growth, particularly in developed economies and non-resource-dependent countries. Quantile regression results further indicate a non-linear relationship: at the lower stages of renewable energy development, the marginal effect of the stock market shows a decreasing trend, but once the development level surpasses a certain threshold, the marginal effect turns to an increasing trend, indicating that the support effect of the stock market on the renewable energy industry has a phased feature of nurturing period and acceleration period. Mechanism tests show that the stock market can promote the development of renewable energy by alleviating financing constraints and enhancing the efficiency of financial institutions and markets. This study not only provides new empirical evidence for understanding the interactive relationship between capital markets and energy transition, but also offers references for countries to formulate differentiated renewable energy development policies.

Keywords: Stock markets; Renewable energy; Cross-country data; Financing constraints; Financial efficiency (search for similar items in EconPapers)
JEL-codes: F21 P48 Q42 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592625002474
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:1262-1274

DOI: 10.1016/j.eap.2025.06.020

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().