Can Banks Sustain the Growth in Renewable Energy Supply? An International Evidence

Choudhury, Tonmoy and Kamran, Muhammad and Djajadikerta, Hadrian Geri and Sarker, Tapan ORCID: https://orcid.org/0000-0002-0682-2940 (2021) Can Banks Sustain the Growth in Renewable Energy Supply? An International Evidence. The European Journal of Development Research. pp. 1-31. ISSN 0957-8811


Abstract

Confronted with rapidly deteriorating climate change resulting from the use of fossil fuels, the transition to renewable energy has now become imminent. But this shift to renewable energy requires massive financial support from banks, affecting their default risk. Responding to the growing environmental concerns and reluctance among banks to increase their exposure in the renewable energy sector, this study presents unique and novel insights on the relationship between the share of renewable energy in the total energy supply of a country and banking risk. To this end, we obtained data for a sample of 80 international banks from 20 countries in the 2006–2017 period. On this data, we implemented a two-stage least squares (2SLS) regression analysis model. Our findings reveal that increasing the share of renewable energy in the total energy supply of a country significantly reduces banks’ default risk. To check the robustness of the results, we performed several tests which also endorsed the validity of our results.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Files associated with this item cannot be displayed due to copyright restrictions.
Faculty/School / Institute/Centre: No Faculty
Faculty/School / Institute/Centre: No Faculty
Date Deposited: 26 Apr 2022 01:46
Last Modified: 31 May 2022 00:55
Uncontrolled Keywords: 2SLS; Banking risk; Distance-to-default; Renewable energy
Fields of Research (2020): 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3502 Banking, finance and investment > 350299 Banking, finance and investment not elsewhere classified
Socio-Economic Objectives (2020): 17 ENERGY > 1708 Renewable energy > 170899 Renewable energy not elsewhere classified
Identification Number or DOI: https://doi.org/10.1057/s41287-021-00492-z
URI: http://eprints.usq.edu.au/id/eprint/47662

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