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The Impact of Renewable Energy Sources on Financial Development, and Economic Growth: The Empirical Evidence from an Emerging Economy

Author

Listed:
  • David Guan

    (Business School, Huanghe Science and Technology University, Zhengzhou 450063, China)

  • Ubaldo Comite

    (Department of Business Sciences, University Giustino Fortunato, 82100 Benevento, Italy)

  • Muhammad Safdar Sial

    (Department of Management Sciences, Comsats University Islamabad (C.U.I.), Islamabad 44000, Pakistan)

  • Asma Salman

    (College of Business Administration, American University in the Emirates, Dubai 503000, United Arab Emirates)

  • Boyao Zhang

    (Faculty of Social Sciences, University of Southampton, Southampton SO17 1BJ, UK)

  • Stefan B. Gunnlaugsson

    (Department of Business Administration, University of Akureyri, 600 Akureyri, Iceland)

  • Urszula Mentel

    (Department of Projects Management and Security Policy, Faculty of Management, Rzeszow University of Technology, 35-959 Rzeszow, Poland)

  • Grzegorz Mentel

    (Department of Quantitative Methods, Faculty of Management, Rzeszow University of Technology, 35-959 Rzeszow, Poland)

Abstract

Developing energy from renewable sources and modernizing the energy system are critical components of China’s efforts to combat climate change. Policymakers and authorities have made significant attempts to bring them. However, one of the major impediments to China’s energy revolution is financial limitations, which are inextricably linked to the country’s economic growth. The present research paper intends to investigate the relationship between economic growth and sustainable financial development on the use of energy from renewable sources in both the short and long run in the context of China. To achieve this, the researchers have utilized the panel data consisting of 10 years from 2011 to 2020. When compared to cross-sectional and time-series data samples, the panel data model offers many benefits. For starters, the panel data includes information on the passage of time and the cross-sectional area. Another benefit of using panel-data models with a larger degree of freedom is that they provide more stable and reliable estimates across short periods across cross-sections. In the case of the short run, there is a positive relationship between economic and financial development and the use of energy from renewable sources in the context of all of China. While in the case of long-term effects, the results indicate the adverse impact of financial development on the use of energy from renewable sources in the western regions of China. These results were deduced using the causality test Granger proposed to determine the path of the causal relationship and the direction of the relationship between the variables. These results indicated that the relationship between economic and financial development in east China was unidirectional, and the nature of the underlying relationship was causal. Meanwhile, in east and west China, economic development in China as a whole has been unidirectionally increasing energy from renewable sources. Our empirical findings suggest many strategies for promoting the growth of energy from renewable sources.

Suggested Citation

  • David Guan & Ubaldo Comite & Muhammad Safdar Sial & Asma Salman & Boyao Zhang & Stefan B. Gunnlaugsson & Urszula Mentel & Grzegorz Mentel, 2021. "The Impact of Renewable Energy Sources on Financial Development, and Economic Growth: The Empirical Evidence from an Emerging Economy," Energies, MDPI, vol. 14(23), pages 1-13, December.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:23:p:8033-:d:692917
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