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The Financial Development-Renewable Energy Consumption Nexus in the Case of Azerbaijan

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  • Shahriyar Mukhtarov

    (Department of World Economy, Baku Engineering University, Hasan Aliyev 120, Khirdalan, Baku AZ0101, Azerbaijan
    UNEC Empirical Research Center, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1001, Azerbaijan)

  • Sugra Humbatova

    (Department of World Economy, Baku Engineering University, Hasan Aliyev 120, Khirdalan, Baku AZ0101, Azerbaijan
    Department of Economics and Management, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1001, Azerbaijan)

  • Natig Gadim-Oglu Hajiyev

    (Department of Regulation of the Economy, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1001, Azerbaijan)

  • Sannur Aliyev

    (Department of International Economics, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1001, Azerbaijan)

Abstract

This article analyzed the relationship between financial development, renewable energy consumption, economic growth, and energy prices in Azerbaijan by employing time series data for the time span of 1993–2015. The autoregressive distributed lagged (ARDL) technique was applied in empirical estimations, because it performs better than all the alternative techniques in small samples, which was the case here in this article. The results of estimation found that there is a positive and statistically significant influence of financial development and economic growth on renewable energy consumption, whereas the prices of energy proxied by CPI have an adverse impact on renewable energy consumption in Azerbaijan. Also, estimation results demonstrated that a 1% rise in financial development, proxied by domestic credit as a percentage of GDP, and economic growth increase renewable energy consumption by 0.16% and 0.60%, respectively. The different financial development impacts on renewable energy consumption and related policy implications were also introduced.

Suggested Citation

  • Shahriyar Mukhtarov & Sugra Humbatova & Natig Gadim-Oglu Hajiyev & Sannur Aliyev, 2020. "The Financial Development-Renewable Energy Consumption Nexus in the Case of Azerbaijan," Energies, MDPI, vol. 13(23), pages 1-14, November.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:23:p:6265-:d:452587
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