The impact of financial development and technological innovations on renewable energy consumption: Do the roles of economic openness and financial stability matter in BRICS economies?

Abstract

There is a significant gap in comprehensively probing the determinants of renewable energy consumption (REN) in developing markets. Extant literature suggests the beneficial role of using renewable energy in diminishing carbon emissions and increasing environmental quality. This work addresses this gap and contributes by investigating the factors which significantly affect the REN in emerging economies. More specifically, the present study attempts to contribute by probing the effects of economic openness and financial stability on REN while considering the roles of financial development, technological innovations, and economic growth. To achieve this purpose, this study focuses on BRICS emerging countries, which are five massive and outstanding emerging economies of the globe, and uses both the fixed effects and quantile panel data approaches for yearly data between 2000 and 2021. Remarkably, the results reveal that economic openness and financial stability positively impact REN, implying that rising them helps achieve environmental sustainability. Moreover, the findings indicate the positive and significant role of financial development and technological innovations in increasing REN, whereas economic growth impacts adversely. The findings have essential recommendations for governments, policymakers, and regulatory bodies especially by focusing on the drivers of REN and attempting to maintain banking sector stability to increase REN and promote environmental sustainability.