The simultaneous impact of education and financial development on renewable energy consumption: an investigation of Next-11 countries

Abstract

The use of fossil fuels is a primary source of global warming owing to the greenhouse effect. Renewable energy is the best alternative environment-friendly energy source. Previous studies have highlighted the significant influence of financial development and education on renewable energy. However, the simultaneous effects of these two factors on renewable energy have rarely been examined, especially in emerging economies. This study employed dynamic seemingly unrelated cointegrating regression and the Dumitrescu–Hurlin causality test to analyze the effect of education and financial development on renewable energy consumption in N-11 countries during 1990–2016. Empirical results show that financial development significantly increased renewable energy use; however, education failed to make a positive difference. Additionally, bidirectional- and unidirectional causality was observed for financial development and education, respectively, toward renewable energy. This suggests that policymakers should combine financial development policies with education to improve the efficiency of renewable energy use.