Does financial development promote renewable energy? Evidence of G20 economies

This paper constructs a fixed-effect model and a panel threshold model to investigate the linear and non-linear impacts of financial development on renewable energy in a STIRPAT framework by using the panel data set of the G20 countries from 2005 to 2018 and further explores the threshold effect of the population (urbanization), affluence (GDP per capita), and technology (R&D) in non-linear models. Key empirical results indicate the following: first, there are no significant linear relationships between financial development and renewable energy consumption. Second, financial development does have significant non-linear impacts on renewable energy consumption, only when population, affluence, and technology are above a certain level (threshold value) can financial development significantly increase renewable energy consumption, otherwise it will have a negative effect. Third, according to the changes in the number of countries within the analysis threshold interval, the positive effect of financial development on renewable energy is increasing during the study period.