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Nexus between Renewable Energy, Credit Gap Risk, Financial Development and R&D Expenditure: Panel ARDL Approach

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  • Ulaş Ünlü

    (The Department of Finance and Banking, The Faculty of Applied Sciences, Akdeniz University, Antalya 07058, Turkey)

  • Furkan Yıldırım

    (The Department of Finance and Banking, The Faculty of Applied Sciences, Akdeniz University, Antalya 07058, Turkey)

  • Ayhan Kuloğlu

    (The Department of Accounting and Tax, Vocational School, Nevsehir Haci Bektas Veli University, Nevsehir 50300, Turkey)

  • Ersan Ersoy

    (The Department of Accounting and Finance Management, The Faculty of Applied Sciences, Uşak University, Uşak 64300, Turkey)

  • Emin Hüseyin Çetenak

    (The Department of Finance and Banking, Faculty of Economics and Administrative Sciences, Nigde Omer Halisdemir University, Nigde 51000, Turkey)

Abstract

In the study, we investigate the relationships between renewable energy consumption sub-indicators of G-8 countries and financial development, credit gap risk, and R&D expenditure from 1996 to 2018. The relationships among the variables in the study are analyzed by employing the Panel ARDL method and the Dumitrescu–Hurlin panel causality test. The cointegration relationships between the variables have been analyzed using the bounds test approach, and an unrestricted error correction model has been established. Contrary to previous studies in the renewable energy literature, this study employed the variable of credit gap risk. Therefore, we believe that this study will fill the gap in the literature and attract the attention of researchers and policymakers. The results indicate that increases in total demand for renewable energy positively affect the financial development of countries. Moreover, R&D expenditures increase as the demand for hydro energy and solar energy increases. This result indicates that wind power consumption has a short-term impact on R&D expenditure, and such an impact ceases to exist in the long run. According to the empirical research findings, the rise in demand for renewable energy may be a factor mitigating the credit gap risk of countries. In other words, the credit gap risk, which is considered a leading indicator of systemic banking crises, can be mitigated by the rise in the demand for renewable energy.

Suggested Citation

  • Ulaş Ünlü & Furkan Yıldırım & Ayhan Kuloğlu & Ersan Ersoy & Emin Hüseyin Çetenak, 2022. "Nexus between Renewable Energy, Credit Gap Risk, Financial Development and R&D Expenditure: Panel ARDL Approach," Sustainability, MDPI, vol. 14(23), pages 1-19, December.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:23:p:16232-:d:994126
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