Does financial structure affect renewable energy consumption? Evidence from G20 countries

This study investigates the effect of financial structure on renewable energy consumption in G20 countries, further categorized into BRICS, G7, developed, and developing countries. It also examines the economic growth channel through which financial structure affects renewable energy consumption and the causality relationships between the two. Using feasible generalized least squares and fixed-effects models, the study finds that financial structure significantly increases renewable energy consumption in all sample groups except BRICS, where it decreases consumption. The study also finds that financial structure indirectly promotes renewable energy consumption through economic growth, with threshold values of economic growth varying by sample group. Specifically, the economic growth threshold beyond which financial structure will impact renewable energy consumption is 8.574 (logarithm) in the full sample, 9.078 (logarithm) in the BRICS, 10.477 (logarithm) in the G7, 10.557 (logarithm) in developed countries, and 8.732 (logarithm) in developing countries. These correspond to $5292 billion in the full sample, $8760 billion in the BRICS, $3,5490 billion in the G7, $3,8446 billion in developed countries, and $6198 billion in developing countries. Finally, the study reveals an uni-directional causality from renewable energy consumption to financial structure in the full sample while the reverse exists in the other sample groups.