Financial development and deployment of renewable energy technologies

- This paper examines financial development and renewable energy deployment.
- We show that financial development is beneficial for renewable sectors.
- The effect is pronounced for renewable sectors with high dependence on external finance.
- This supports the view that financial development leads to a reduction in CO2 emissions.

Using a unique panel data set of 30 countries for the 2000-2013 period, we examine whether financial market development promotes the deployment of renewable energy on a global scale. In particular, we conjecture that countries with well-developed financial markets experience growth in the renewable energy sector due to easier access to external financing. We find that renewable sectors that are relatively more dependent on debt and equity financing grow disproportionately faster in countries with developed financial markets. Our results support the view that financial development leads to a reduction in CO2 emissions by addressing the role of financial markets in deploying renewable energy.