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How public debt and renewable energy influence international clean energy finance: Insights from low- and middle-income countries with governance considerations

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  • Ahuja, Suman
  • Kumar, Ashish

Abstract

Achieving clean energy goals in developing countries requires substantial international financial support. However, access to it is influenced by multiple factors, notably fiscal conditions and the quality of governance. This study investigates the impact of public debt, renewable energy consumption, and governance quality on international clean energy finance in 46 low- and middle-income countries between 2000 and 2021. Using panel data techniques, including fixed effects and instrumental variable generalized method of moments estimation, we assessed both the direct and interactive effects of these key variables. The analysis revealed that public debt hinders financial support, whereas renewable energy consumption and governance quality both enhance it. Moreover, the interaction between public debt and governance quality suggests that high debt diminishes the benefits of strong governance. These findings underscore the importance of aligning sound fiscal management with institutional reforms to support sustainable access to international finance for clean energy.

Suggested Citation

  • Ahuja, Suman & Kumar, Ashish, 2025. "How public debt and renewable energy influence international clean energy finance: Insights from low- and middle-income countries with governance considerations," Finance Research Letters, Elsevier, vol. 86(PD).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pd:s1544612325017830
    DOI: 10.1016/j.frl.2025.108529
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