THE ROLE OF FINANCIAL DEVELOPMENT ON THE SHARE OF RENEWABLE ENERGY IN JAPAN: A COMPREHENSIVE TIME-SERIES ANALYSIS

Adem Gã–k and Caner Demir
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Adem Gã–k: Department of Economics, Kırklareli University, Kırklareli, Turkiye
Authors registered in the RePEc Author Service: Adem Gök

The Singapore Economic Review (SER), 2024, vol. 69, issue 04, 1415-1437

Abstract: The purpose of this study is to analyze the effect of financial development (FD) on the share of renewable energy (RE) usage in Japan. The existing theoretical literature and empirical analyses covering different country cases reveal that FD might have positive, negative, or insignificant effect on RE use. Since there is no empirical investigation of the issue for Japan, the study aims to contribute to the literature. To that end, we used several time-series techniques to detect the association between RE usage and FD in Japan over the 1970–2020 period. The results obtained from the ARDL, Hatemi-J, Maki, Tsong et al. and NARDL cointegration tests showed that there is a significant cointegrated relationship between the share of RE use, FD, GDP per capita and trade openness. As for the long-run coefficients obtained from the ARDL, FMOLS, CCR and NARDL estimators revealed that increases in FD and trade openness raise the share of RE usage while increases in GDP per capita reduce it. Briefly, for the Japan case, we may suggest that improving the financial market structure of the country will bear fruit in terms of the share of cleaner and sustainable energy usage.

Keywords: Cointegration; financial development; GDP per capita; renewable energy; time — series analysis; trade openness (search for similar items in EconPapers)
JEL-codes: C22 G00 Q42 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0217590824450036

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