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Energy policy uncertainty, financial development and public-private investment in BRIC nations

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  • Chen, Qian

Abstract

The transition to sustainable energy systems requires substantial investment, yet the impact of policy uncertainty on investment decisions remains poorly understood, particularly in emerging economies. While previous studies have examined various determinants of energy investment, the interplay between energy policy uncertainty (EPU) and financial sector development (FSD) in shaping public-private energy investments has received limited attention. This study investigates how EPU influences public-private energy investments in BRIC nations and examines FSD's moderating role. Using an ARDL model on data from 1998–2022, we find that EPU significantly deters investment, while FSD exhibits a positive influence. Notably, FSD moderates the negative impact of EPU, suggesting that robust financial sectors can buffer against policy uncertainty's adverse effects. These findings provide crucial insights for policymakers in emerging economies, highlighting the importance of stable policy frameworks and developed financial markets in facilitating energy transition investments.

Suggested Citation

  • Chen, Qian, 2025. "Energy policy uncertainty, financial development and public-private investment in BRIC nations," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014466
    DOI: 10.1016/j.frl.2024.106417
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    More about this item

    Keywords

    Energy policy uncertainty; Financial development; Public-private investment; Energy Transition; BRIC Nations; Investment Risk;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

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