The impact of financial development on renewable energy consumption: new insights from Ghana

A way of reducing global warming and tackling Ghana’s energy sector crisis, known as Dumsor, is through renewable energy usage. Nevertheless, the advancement of the renewable energy industry is contingent on economic growth, the availability of financial resources, and energy prices. The paper explores the long-run impact of financial development on renewable energy consumption while controlling for energy prices and economic growth. Consistent with the aim of the paper, the ARDL bounds testing, Bayer-Hank, Gregory and Hansen cointegration, VECM, FMOLS, CCR and DOLS tests are employed. The empirical analysis supports cointegration between variables. Moreover, the findings indicated that financial development drives renewable energy use in Ghana, whereas energy costs and economic growth have a negative effect. This study offers a substantial addition to renewable energy literature and paves the way for policymakers to pursue alternative energy sources to help satiate the nation’s growing energy needs.