IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v198y2022icp984-998.html
   My bibliography  Save this article

The role of financial inclusion in adoption of solar photovoltaic systems: A case of Uganda

Author

Listed:
  • Aarakit, Sylvia Manjeri
  • Ntayi, Joseph M.
  • Wasswa, Francis
  • Buyinza, Faisal
  • Adaramola, Muyiwa S.
  • Ssennono, Vincent F.

Abstract

Globally, renewable energy technologies, such as solar photovoltaic (PV) contribute significantly to sustainable development. However, adoption of solar PV is limited in many developing countries. Governments have rolled out policy strategies like financial inclusion to stimulate deployment of modern energy technologies. Notwithstanding, little is known about financial inclusion and household solar PV adoption. Using two waves of Uganda National Household Survey data covering 28,913 households, this paper examines the effect of financial inclusion on adoption of solar PV. The study employed logit model and pooled ordinary least squares for estimation. Taking endogeneity into account, we find that financial inclusion has a strong positive effect on solar PV adoption. The estimates show that unit increase in financial inclusion increases the likelihood of residential solar PV adoption by 3.6% (p < 0.01). This finding is consistent across all robustness checks. The findings further suggest that use of mobile money is more important for solar PV adoption. The study identified household income and education as possible pathways through which financial inclusion influences solar PV adoption. Thus, policy makers and renewable energy practitioners should continue prioritizing financial inclusion particularly use of mobile money and financial remittances so as stimulate adoption of solar PV.

Suggested Citation

  • Aarakit, Sylvia Manjeri & Ntayi, Joseph M. & Wasswa, Francis & Buyinza, Faisal & Adaramola, Muyiwa S. & Ssennono, Vincent F., 2022. "The role of financial inclusion in adoption of solar photovoltaic systems: A case of Uganda," Renewable Energy, Elsevier, vol. 198(C), pages 984-998.
    • Handle: RePEc:eee:renene:v:198:y:2022:i:c:p:984-998
    DOI: 10.1016/j.renene.2022.08.056
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148122012228
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2022.08.056?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mayanja, Musa & Adong, Annet, 2016. "A pathway to financial inclusion: mobile money and individual Savings in Uganda," Research Series 242365, Economic Policy Research Centre (EPRC).
    2. Chang, Lei & Qian, Chong & Dilanchiev, Azer, 2022. "Nexus between financial development and renewable energy: Empirical evidence from nonlinear autoregression distributed lag," Renewable Energy, Elsevier, vol. 193(C), pages 475-483.
    3. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    4. Lwanga, Musa & Adong, Annet, 2016. "A pathway to financial inclusion: mobile money and individual Savings in Uganda," Research Series 234553, Economic Policy Research Centre (EPRC).
    5. Aklin, Michaël & Cheng, Chao-Yo & Urpelainen, Johannes, 2018. "Social acceptance of new energy technology in developing countries: A framing experiment in rural India," Energy Policy, Elsevier, vol. 113(C), pages 466-477.
    6. Folorunsho M. Ajide, 2020. "Financial inclusion in Africa: does it promote entrepreneurship?," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 12(4), pages 687-706, January.
    7. Lwanga Mayanja, Musa & Adong, Annet, 2016. "A pathway to financial inclusion: Mobile money and individual savings in Uganda," Research Reports 253557, Economic Policy Research Centre (EPRC).
    8. Archer, Kellie J. & Lemeshow, Stanley & Hosmer, David W., 2007. "Goodness-of-fit tests for logistic regression models when data are collected using a complex sampling design," Computational Statistics & Data Analysis, Elsevier, vol. 51(9), pages 4450-4464, May.
    9. Kenneth Lee & Edward Miguel & Catherine Wolfram, 2020. "Does Household Electrification Supercharge Economic Development?," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 122-144, Winter.
    10. Guta, Dawit Diriba, 2020. "Determinants of household use of energy-efficient and renewable energy technologies in rural Ethiopia," Technology in Society, Elsevier, vol. 61(C).
    11. Qureshi, Tahir Masood & Ullah, Kafait & Arentsen, Maarten J., 2017. "Factors responsible for solar PV adoption at household level: A case of Lahore, Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 754-763.
    12. Mamadou Saliou Barry & Anna Creti, 2020. "Pay-as-you-go contracts for electricity access: bridging the « last mile » gap? A case study in Benin," Working Papers 2006, Chaire Economie du climat.
    13. Weliswa Matekenya & Clement Moyo & Leward Jeke, 2021. "Financial inclusion and human development: Evidence from Sub-Saharan Africa," Development Southern Africa, Taylor & Francis Journals, vol. 38(5), pages 683-700, September.
    14. Irfan, Mohd & Yadav, Sarvendra & Shaw, Krishnendu, 2021. "The adoption of solar photovoltaic technology among Indian households: Examining the influence of entrepreneurship," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    15. Bourcet, Clémence, 2020. "Empirical determinants of renewable energy deployment: A systematic literature review," Energy Economics, Elsevier, vol. 85(C).
    16. Noelia Cámara & David Tuesta, 2018. "Measuring financial inclusion: a multidimensional index," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The role of data in supporting financial inclusion policy, volume 47, Bank for International Settlements.
    17. Peterson K. Ozili, 2021. "Financial inclusion research around the world: A review," Forum for Social Economics, Taylor & Francis Journals, vol. 50(4), pages 457-479, October.
    18. Rai, Varun & Reeves, D. Cale & Margolis, Robert, 2016. "Overcoming barriers and uncertainties in the adoption of residential solar PV," Renewable Energy, Elsevier, vol. 89(C), pages 498-505.
    19. Li, Linyang, 2018. "Financial inclusion and poverty: The role of relative income," China Economic Review, Elsevier, vol. 52(C), pages 165-191.
    20. Isaac Koomson & Renato A. Villano & David Hadley, 2020. "Effect of Financial Inclusion on Poverty and Vulnerability to Poverty: Evidence Using a Multidimensional Measure of Financial Inclusion," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(2), pages 613-639, June.
    21. Phoumin, Han & Kimura, Fukunari, 2019. "Cambodia's energy poverty and its effects on social wellbeing: Empirical evidence and policy implications," Energy Policy, Elsevier, vol. 132(C), pages 283-289.
    22. Palm, Alvar & Lantz, Björn, 2020. "Information dissemination and residential solar PV adoption rates: The effect of an information campaign in Sweden," Energy Policy, Elsevier, vol. 142(C).
    23. De Groote, Olivier & Pepermans, Guido & Verboven, Frank, 2016. "Heterogeneity in the adoption of photovoltaic systems in Flanders," Energy Economics, Elsevier, vol. 59(C), pages 45-57.
    24. Alkire, Sabina & Foster, James, 2011. "Counting and multidimensional poverty measurement," Journal of Public Economics, Elsevier, vol. 95(7), pages 476-487.
    25. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    26. Dogan, Eyup & Madaleno, Mara & Taskin, Dilvin, 2021. "Which households are more energy vulnerable? Energy poverty and financial inclusion in Turkey," Energy Economics, Elsevier, vol. 99(C).
    27. Briguglio, Marie & Formosa, Glenn, 2017. "When households go solar: Determinants of uptake of a Photovoltaic Scheme and policy insights," Energy Policy, Elsevier, vol. 108(C), pages 154-162.
    28. Barry, Mamadou Saliou & Creti, Anna, 2020. "Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin," Energy Economics, Elsevier, vol. 90(C).
    29. Hyun, Suk & Taghizadeh-Hesary, Farhad & Shim, Hyoung Suk, 2021. "Modeling solar energy system demand using household-level data in Myanmar," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 629-639.
    30. Balta-Ozkan, Nazmiye & Yildirim, Julide & Connor, Peter M. & Truckell, Ian & Hart, Phil, 2021. "Energy transition at local level: Analyzing the role of peer effects and socio-economic factors on UK solar photovoltaic deployment," Energy Policy, Elsevier, vol. 148(PB).
    31. Joseph Mawejje & Paul Lakuma, 2019. "Macroeconomic effects of Mobile money: evidence from Uganda," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-20, December.
    32. Abdul-Salam, Yakubu & Phimister, Euan, 2019. "Modelling the impact of market imperfections on farm household investment in stand-alone solar PV systems," World Development, Elsevier, vol. 116(C), pages 66-76.
    33. Jayasinghe, Maneka & Selvanathan, E.A. & Selvanathan, Saroja, 2021. "Energy poverty in Sri Lanka," Energy Economics, Elsevier, vol. 101(C).
    34. Vasseur, Véronique & Kemp, René, 2015. "The adoption of PV in the Netherlands: A statistical analysis of adoption factors," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 483-494.
    35. Quanda Zhang & Alberto Posso, 2019. "Thinking Inside the Box: A Closer Look at Financial Inclusion and Household Income," Journal of Development Studies, Taylor & Francis Journals, vol. 55(7), pages 1616-1631, July.
    36. Kurata, Masamitsu & Matsui, Noriatsu & Ikemoto, Yukio & Tsuboi, Hiromi, 2018. "Do determinants of adopting solar home systems differ between households and micro-enterprises? Evidence from rural Bangladesh," Renewable Energy, Elsevier, vol. 129(PA), pages 309-316.
    37. Amitendu Palit, 2019. "Solar Energy Financing in India," World Scientific Book Chapters, in: S Narayan & Christopher Len & Roshni Kapur (ed.), Sustainable Energy Transition in South Asia Challenges and Opportunities, chapter 10, pages 171-185, World Scientific Publishing Co. Pte. Ltd..
    38. Zhang, Sufang, 2016. "Innovative business models and financing mechanisms for distributed solar PV (DSPV) deployment in China," Energy Policy, Elsevier, vol. 95(C), pages 458-467.
    39. Ssennono, Vincent Fred & Ntayi, Joseph M. & Buyinza, Faisal & Wasswa, Francis & Aarakit, Sylvia Manjeri & Mukiza, Chris Ndatira, 2021. "Energy poverty in Uganda: Evidence from a multidimensional approach," Energy Economics, Elsevier, vol. 101(C).
    40. Alipour, M. & Salim, H. & Stewart, Rodney A. & Sahin, Oz, 2020. "Predictors, taxonomy of predictors, and correlations of predictors with the decision behaviour of residential solar photovoltaics adoption: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 123(C).
    41. Koomson, Isaac & Danquah, Michael, 2021. "Financial inclusion and energy poverty: Empirical evidence from Ghana," Energy Economics, Elsevier, vol. 94(C).
    42. Buyinza Faisal & Jakob Kapella & Senono Vicent, 2021. "Household air pollution and household health in Uganda," Development Southern Africa, Taylor & Francis Journals, vol. 38(3), pages 437-453, May.
    43. Sefa Awaworyi Churchill & Vijaya Bhaskar Marisetty, 2020. "Financial inclusion and poverty: a tale of forty-five thousand households," Applied Economics, Taylor & Francis Journals, vol. 52(16), pages 1777-1788, April.
    44. Corti Paul Lakuma & Robert Marty & Fred Muhumuza, 2019. "Financial inclusion and micro, small, and medium enterprises (MSMEs) growth in Uganda," Journal of Innovation and Entrepreneurship, Springer, vol. 8(1), pages 1-20, December.
    45. Mamadou Saliou Barry & Anna Creti, 2020. "Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin," Post-Print hal-03148505, HAL.
    46. Mukisa, Nicholas & Manitisa, Mele Sikimeti & Nduhuura, Paul & Tugume, Erick & Chalwe, Chanda Karen, 2022. "Solar home systems adoption in Sub-Saharan African countries: Household economic and environmental benefits assessment," Renewable Energy, Elsevier, vol. 189(C), pages 836-852.
    47. Wassie, Yibeltal T. & Adaramola, Muyiwa S., 2019. "Potential environmental impacts of small-scale renewable energy technologies in East Africa: A systematic review of the evidence," Renewable and Sustainable Energy Reviews, Elsevier, vol. 111(C), pages 377-391.
    48. Demirguc-Kunt,Asli & Klapper,Leora & Singer,Dorothe, 2017. "Financial inclusion and inclusive growth : a review of recent empirical evidence," Policy Research Working Paper Series 8040, The World Bank.
    49. Luke C D Stein & Constantine Yannelis & Francesca Cornelli, 2020. "Financial Inclusion, Human Capital, and Wealth Accumulation: Evidence from the Freedman’s Savings Bank [Distance and private information]," Review of Financial Studies, Society for Financial Studies, vol. 33(11), pages 5333-5377.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Badeeb, Ramez Abubakr & Wang, Bo & Zhao, Jun & Khan, Zeeshan & Uktamov, Khusniddin Fakhriddinovich & Zhang, Changyong, 2023. "Natural resources extraction and financial inclusion: Linear and non-linear effect of natural resources on financial sector," Resources Policy, Elsevier, vol. 85(PA).
    2. Best, Rohan, 2023. "Equitable reverse auctions supporting household energy investments," Energy Policy, Elsevier, vol. 177(C).
    3. Zhao, Congyu & Jia, Rongwen & Dong, Kangyin, 2023. "Does financial inclusion achieve the dual dividends of narrowing carbon inequality within cities and between cities? Empirical evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 195(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sen, Kanchan Kumar & Karmaker, Shamal Chandra & Hosan, Shahadat & Chapman, Andrew J. & Uddin, Md Kamal & Saha, Bidyut Baran, 2023. "Energy poverty alleviation through financial inclusion: Role of gender in Bangladesh," Energy, Elsevier, vol. 282(C).
    2. Isaac Koomson & Raymond Elikplim Kofinti & Esther Laryea, 2024. "Financial inclusion and multidimensional child poverty," Review of Economics of the Household, Springer, vol. 22(1), pages 237-260, March.
    3. Mohammed Seid Hussen & Mustafe Abdi Mohamed, 2023. "Impact of financial inclusion on household welfare in Ethiopia," Future Business Journal, Springer, vol. 9(1), pages 1-12, December.
    4. Palm, A., 2020. "Early adopters and their motives: Differences between earlier and later adopters of residential solar photovoltaics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    5. Koomson, Isaac & Danquah, Michael, 2021. "Financial inclusion and energy poverty: Empirical evidence from Ghana," Energy Economics, Elsevier, vol. 94(C).
    6. Ma, Qiang & Li, Sa & Aslam, Misbah & Ali, Naveed & Alamri, Ahmad Mohammed, 2023. "Extraction of natural resources and sustainable renewable energy: COP26 target in the context of financial inclusion," Resources Policy, Elsevier, vol. 82(C).
    7. Jun Zhang & Yuang He & Jing Zhang, 2022. "Energy Poverty and Depression in Rural China: Evidence from the Quantile Regression Approach," IJERPH, MDPI, vol. 19(2), pages 1-21, January.
    8. Muhammad Shafiullah & Zhilun Jiao & Muhammad Shahbaz & Kangyin Dong, 2023. "Examining energy poverty in Chinese households: An Engel curve approach," Australian Economic Papers, Wiley Blackwell, vol. 62(1), pages 149-184, March.
    9. Bukari, Chei & Broermann, Shanaz & Okai, Davidson, 2021. "Energy poverty and health expenditure: Evidence from Ghana," Energy Economics, Elsevier, vol. 103(C).
    10. Lin, Boqiang & Okyere, Michael Adu, 2023. "Race and energy poverty: The moderating role of subsidies in South Africa," Energy Economics, Elsevier, vol. 117(C).
    11. Fry, Jane M. & Farrell, Lisa & Temple, Jeromey B., 2022. "Energy poverty and retirement income sources in Australia," Energy Economics, Elsevier, vol. 106(C).
    12. Koomson, Isaac & Afoakwah, Clifford & Ampofo, Akwasi, 2022. "How does ethnic diversity affect energy poverty? Insights from South Africa," Energy Economics, Elsevier, vol. 111(C).
    13. Dube, Thulani & Chummun, Bibi Zaheenah, 2019. "Mobile Money access and usage among the rural communities in Zimbabwe," MPRA Paper 97578, University Library of Munich, Germany, revised 05 Dec 2019.
    14. Zhian Zhiow Augustinne Wong & Ramez Abubakr Badeeb & Abey P. Philip, 2023. "Financial Inclusion, Poverty, and Income Inequality in ASEAN Countries: Does Financial Innovation Matter?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 471-503, September.
    15. Isaac Koomson & Moses Okumu & David Ansong, 2022. "Introducing the Disease Outbreak Resilience Index (DORI) Using the Demographic and Health Surveys Data from sub-Saharan Africa," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(3), pages 1149-1175, August.
    16. Zhang, Jiaping & Zhang, Huirong & Gong, Xiaomei, 2022. "Mobile payment and rural household consumption: Evidence from China," Telecommunications Policy, Elsevier, vol. 46(3).
    17. Zhang, Jianhua & Ballas, Dimitris & Liu, Xiaolong, 2023. "Neighbourhood-level spatial determinants of residential solar photovoltaic adoption in the Netherlands," Renewable Energy, Elsevier, vol. 206(C), pages 1239-1248.
    18. Ren, Yi-Shuai & Jiang, Yong & Narayan, Seema & Ma, Chao-Qun & Yang, Xiao-Guang, 2022. "Marketisation and rural energy poverty: Evidence from provincial panel data in China," Energy Economics, Elsevier, vol. 111(C).
    19. Alipour, M. & Salim, H. & Stewart, Rodney A. & Sahin, Oz, 2020. "Predictors, taxonomy of predictors, and correlations of predictors with the decision behaviour of residential solar photovoltaics adoption: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 123(C).
    20. Simplice A. Asongu & Nicholas M. Odhiambo, 2023. "The role of financial inclusion in moderating the incidence of entrepreneurship on energy poverty in Ghana," Working Papers of the African Governance and Development Institute. 23/035, African Governance and Development Institute..

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:198:y:2022:i:c:p:984-998. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.