Can Banks Sustain the Growth in Renewable Energy Supply? An International Evidence
Article
Article Title | Can Banks Sustain the Growth in Renewable Energy Supply? An International Evidence |
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ERA Journal ID | 32867 |
Article Category | Article |
Authors | Choudhury, Tonmoy (Author), Kamran, Muhammad (Author), Djajadikerta, Hadrian Geri (Author) and Sarker, Tapan (Author) |
Journal Title | European Journal of Development Research |
Number of Pages | 31 |
Year | 2021 |
Publisher | Springer |
Place of Publication | United Kingdom |
ISSN | 0957-8811 |
1743-9728 | |
Digital Object Identifier (DOI) | https://doi.org/10.1057/s41287-021-00492-z |
Web Address (URL) | https://link.springer.com/article/10.1057/s41287-021-00492-z |
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. |
Keywords | 2SLS; Banking risk; Distance-to-default; Renewable energy |
ANZSRC Field of Research 2020 | 350299. Banking, finance and investment not elsewhere classified |
Public Notes | Files associated with this item cannot be displayed due to copyright restrictions. |
Byline Affiliations | Edith Cowan University |
Griffith University | |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q72z5/can-banks-sustain-the-growth-in-renewable-energy-supply-an-international-evidence
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