RENEWABLE ENERGY CONSUMPTİON AND FİNANCİAL DEVELOPMENT RELATİONSHİP: EVİDENCE SELECTED OECD COUNTRİES

Abstract

The increasing use of non-renewable energy many permanent environmental problems such as global warming, air pollution, and climate change. Countries are turning to renewable energy sources due to the harmful effects of non-renewable energy consumption. Renewable energy (RE) is a cleaner, safer, and inexhaustible energy type than non-RE. In addition, RE will reduce reliance on international energy markets. For this reason, countries produce projects that will increase the amount of RE consumption. RE projects can be realized as a result of high initial costs. The increase in RE consumption in countries depends on the feasibility of these investments. A developed financial system is needed to create an enabling environment to promote RE. The aim of the paper is to empirically examine the direction of causality between RE consumption and financial development (FIND) in OECD countries. For this purpose, Dumitrescu and Hurlin (2012) panel causality test was used in the study. According to the panel results in the study, it has been determined that there is a bidirectional causal relationship between RE consumption and FIND. When country-specific results are examined, bidirectional causality between FIND and RE consumption in Hungary has been identified. In Germany, Greece, Latvia, and Mexico, it has been determined that there is a unidirectional causal relationship from FIND to RE consumption, while in Finland, Lithuania, Poland, and Spain, there is a unidirectional causal relationship from RE consumption to FIND.