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Financial Development and Renewable Energy Consumption in Nigeria

Author

Listed:
  • Stephen K. Dimnwobi

    (Nnamdi Azikiwe University Awka, Nigeria)

  • Chekwube V. Madichie

    (Pan-Atlantic University, Lagos, Nigeria)

  • Chukwunonso Ekesiobi

    (Chukwuemeka Odumegwu Ojukwu University, Nigeria)

  • Simplice A. Asongu

    (Yaoundé, Cameroon)

Abstract

Financial sector performance is increasingly linked with the transition to renewable energy in the sustainability discourse of developing economies. This paper examines the nexus and implication(s) of financial development on renewable energy consumption in Nigeria (the largest and most populous economy in Africa). Specifically, this study utilised the broad based financial development index data to effectively address the multidimensional nature of financial development and the portion of renewable energy in total energy consumption as key variables, while other relevant pieces of information (growth rate of per capita GDP, foreign direct investment and consumer price index) were incorporated. The study employed a blend of the ADF test and Zivot-Andrew test to ascertain stationarity properties as well as the likelihood of structural breaks, while the ARDL was utilized to determine the long-run relationship(s) using data from 1981 to 2019. The study estimation finds, among other things, that financial development is critical for renewable energy consumption in Nigeria and recommends policies to promote better outcomes for the financial and energy sectors, respectively.

Suggested Citation

  • Stephen K. Dimnwobi & Chekwube V. Madichie & Chukwunonso Ekesiobi & Simplice A. Asongu, 2022. "Financial Development and Renewable Energy Consumption in Nigeria," Working Papers of the African Governance and Development Institute. 22/024, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:22/024
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    Cited by:

    1. Stephen K. Dimnwobi & Kingsley I. Okere & Favour C. Onuoha & Benedict I. Uzoechina & Chukwunonso Ekesiobi & Ebele S. Nwokoye, 2023. "Energising Environmental Sustainability in Sub-Saharan Africa: the role of Governance Quality in Mitigating the Environmental Impact of Energy Poverty," Working Papers of the African Governance and Development Institute. 23/050, African Governance and Development Institute..
    2. Stephen K. Dimnwobi & Kingsley I. Okere & Favour C. Onuoha & Benedict I. Uzoechina & Chukwunonso Ekesiobi & Ebele S. Nwokoye, 2023. "Energising Environmental Sustainability in Sub-Saharan Africa: the role of Governance Quality in Mitigating the Environmental Impact of Energy Poverty," Working Papers 23/050, European Xtramile Centre of African Studies (EXCAS).
    3. Uju Regina Ezenekwe & Eze A. Eze & Geraldine Ejiaka Nzeribe & Maria Chinecherem Uzonwanne, 2023. "Winning the Environmental Sustainability Crusade: Do Agricultural Development and Public Debt Mitigate Environmental Pollution in Nigeria?," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 1481-1497, September.
    4. Taghizadeh-Hesary, Farhad & Dong, Kangyin & Zhao, Congyu & Phoumin, Han, 2023. "Can financial and economic means accelerate renewable energy growth in the climate change era? The case of China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 730-743.
    5. Mukhtarov, Shahriyar & Mikayilov, Jeyhun I., 2023. "Could financial development eliminate energy poverty through renewable energy in Poland?," Energy Policy, Elsevier, vol. 182(C).
    6. Salaudeen Mohammed Bashir, 2023. "Effect of Crude Oil Revenue on the Oil and Non-oil Sectors in Nigeria," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 138-161, October.
    7. Appiah-Otoo, Isaac & Chen, Xudong & Ampah, Jeffrey Dankwa, 2023. "Does financial structure affect renewable energy consumption? Evidence from G20 countries," Energy, Elsevier, vol. 272(C).
    8. Aydin, Mucahit & Bozatli, Oguzhan, 2023. "The effects of green innovation, environmental taxes, and financial development on renewable energy consumption in OECD countries," Energy, Elsevier, vol. 280(C).
    9. Okere, Kingsley Ikechukwu & Dimnwobi, Stephen Kelechi & Ekesiobi, Chukwunonso & Onuoha, Favour Chidinma, 2023. "Turning the tide on energy poverty in sub-Saharan Africa: Does public debt matter?," Energy, Elsevier, vol. 282(C).
    10. Lee, Chi-Chuan & Zhang, Jian & Hou, Shanshuai, 2023. "The impact of regional renewable energy development on environmental sustainability in China," Resources Policy, Elsevier, vol. 80(C).
    11. Ekundayo Peter Mesagan & Xuan Vinh Vo & Precious Muhammed Emmanuel, 2023. "The technological role in the growth-enhancing financial development: evidence from African nations," Economic Change and Restructuring, Springer, vol. 56(1), pages 657-680, February.
    12. Onuoha, Favour Chidinma & Dimnwobi, Stephen Kelechi & Okere, Kingsley Ikechukwu & Ekesiobi, Chukwunonso, 2023. "Funding the green transition: Governance quality, public debt, and renewable energy consumption in Sub-Saharan Africa," Utilities Policy, Elsevier, vol. 82(C).

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    More about this item

    Keywords

    Financial development; Renewable energy consumption; Nigeria;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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