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<p>Sustainable development through economic growth has led to the importance of transitioning to renewable energy. However, APEC’s heavy reliance on fossil fuels and various levels of economic growth generate unique challenges in attaining these sustainability goals. While existing literature focuses on financial development (FD) influencing energy transitions, it overlooks how institutional quality (IQ) influences the effectiveness of FD in promoting renewable energy consumption (REC). This study analyzes 12 APEC economies from 2002 to 2021 to explore the dynamics of FD, REC, and the moderating role of IQ. The study applied fixed-effects and panel quantile regression, and robustness checks by varying explanatory variables and replacing econometric methodologies. The findings reveal that FD has a negative effect on REC, mainly at the median quantile, indicating a bias towards traditional energy investments. IQ positively moderates the FD–REC relationship but has no direct significant impact on REC. Moreover, energy intensity (EI) and technological innovation (TI) negatively enhance REC, whereas trade openness (TO) has a positive but insignificant association with REC. Finally, this study has policy implications for APEC economies to strengthen institutional frameworks, boost REC, and contribute to global climate targets, advancing SDG 7 (affordable and clean energy) and SDG 13 (climate action).</p>

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Financial development and renewable energy consumption: a novel view under the moderating role of institutional quality across APEC economies

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年6月22日

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  • Mohammad Abir Shahid Chowdhury,
  • Min An,
  • Martina Hedvicakova

摘要

Sustainable development through economic growth has led to the importance of transitioning to renewable energy. However, APEC’s heavy reliance on fossil fuels and various levels of economic growth generate unique challenges in attaining these sustainability goals. While existing literature focuses on financial development (FD) influencing energy transitions, it overlooks how institutional quality (IQ) influences the effectiveness of FD in promoting renewable energy consumption (REC). This study analyzes 12 APEC economies from 2002 to 2021 to explore the dynamics of FD, REC, and the moderating role of IQ. The study applied fixed-effects and panel quantile regression, and robustness checks by varying explanatory variables and replacing econometric methodologies. The findings reveal that FD has a negative effect on REC, mainly at the median quantile, indicating a bias towards traditional energy investments. IQ positively moderates the FD–REC relationship but has no direct significant impact on REC. Moreover, energy intensity (EI) and technological innovation (TI) negatively enhance REC, whereas trade openness (TO) has a positive but insignificant association with REC. Finally, this study has policy implications for APEC economies to strengthen institutional frameworks, boost REC, and contribute to global climate targets, advancing SDG 7 (affordable and clean energy) and SDG 13 (climate action).