Impact of financial inclusion and green bond financing for renewable energy mix: implications for financial development in OECD economies

The study aims to empirically estimate the nexus of green bond financing with renewable energy index OECD countries. Using the OECD countries data over the period of the 2011-2019, the study estimated the nexus between constructs. To justify the study findings and present widespread policy implications on recent topicality Padroni unit root test, FMOLS and DOLS technique is applied. For robustness analysis, long-run sensitivity analysis using FMOLS extension is used, and a comparative picture of green bond financing nexus with renewable energy index is presented. The study presented the consistent effects of green bond financing on renewable energy index indicators. This asymmetrical role of green bonds is confirmed on renewable energy indicators over the sample period. OECD countries injected 31% role of green bond financing on renewable energy index constructs, and it raised 9.4% of per unit energy efficiency in renewable energy systems; by this, the study findings warrant maximum support through public office, energy ministries, and departments for energy efficiency optimization. The study presents multiple policy implications to enhance renewable energy generation for energy efficiency through different alternative sources. Despite growing literature, the empirical discussion on this topicality is still shattered and less studied, which is extended and contributed by recent research. Furthermore, efficient regulation in the renewable energy sector may convert financial uncertainty into a huge opportunity. Investing in renewable energy stocks might help investors diversify their portfolios.

Automated summary

This study empirically estimates the relationship between green bond financing and renewable energy index in OECD countries, highlighting the consistent effects of green bond financing on renewable energy indicators. The study presents policy implications to enhance renewable energy generation and energy efficiency, and suggests that efficient regulation in the renewable energy sector can convert financial uncertainty into a significant opportunity.