Financial efficiency and its impact on renewable energy investment: Empirical evidence from advanced and emerging economies

The worldwide economic consequences of environmental pollution highlight the significance of renewable energy sources, which are considered the leading factor that can help economies fight the menace of global warming. An efficient financial structure can provide funds at an affordable cost to support renewable energy projects. A limited number of empirics have investigated the role of financial efficiency in promoting renewable energy sources, but none have asymmetrically estimated the link between both factors. We thus want to determine if the influence of financial efficiency on investments in renewable energy from 1996 to 2020 is symmetrical or asymmetrical in 23 advanced and developing nations by employing the nonlinear ARDL-PMG. The symmetric results confer that increased financial efficiency is beneficial for promoting renewable energy investment in the long run. In general, the asymmetric results imply that a rise in financial efficiency supports renewable energy investment, and a fall in financial efficiency reduces it but with different magnitudes in emerging and developed economies. Our results propose that financial partnerships between the public and private sectors should be encouraged to promote investment possibilities in renewable energy sources.