Financial development and renewable energy adoption in EU and ASEAN countries

Florian Horky and Jarko Fidrmuc

Energy Economics, 2024, vol. 131, issue C

Abstract: The shift from carbon-based to green energy is pivotal in addressing climate change. However, this transition is expensive, and the availability of financing sources is a necessary precondition for the green transformation of the economy. We therefore examine the role of financial institutions and capital markets in facilitating this change, focusing on a heterogeneous sample of 32 EU and ASEAN countries covering the years 2000 to 2020. Our findings reveal a persistent preference by financial institutions and banks for carbon-intensive energy production, negatively impacting renewable energy consumption. Contrarily, developed capital markets demonstrate a positive influence on green energy initiatives, especially pronounced in EU countries. The results highlight a dichotomy in financial support for green energy transition. While traditional financial institutions lag in supporting renewable energy, developed capital markets show a positive effect for green energy production. Concluding, we advocate for an increasing financialization of renewable energy markets and enhanced regulatory support for banks and financial institutions in supporting renewable energy business models.

Keywords: Energy transition; Renewables; Financial institutions; Capital markets; Climate change; SDG (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988324000768
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:eneeco:v:131:y:2024:i:c:s0140988324000768

DOI: 10.1016/j.eneco.2024.107368

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().