The Positive Influences of Renewable Energy Consumption on Financial Development and Economic Growth

Abstract

This study aims to evaluate the positive impacts of renewable energy usage on the economic growth and financial development. For this purpose, an evaluation has been performed with VAR analysis. In the analysis process, annual data for the period between 1990 and 2015 is used. The findings show that renewable energy usage and financial development do not have a powerful influence on the economic growth. However, it is identified that renewable energy usage has a positive impact on the financial development. Hence, it is strongly recommended that renewable energy usage should be encouraged by policy makers in the country. Nonetheless, to understand the main indicators of economic growth, many different factors should be taken into consideration. It is seen that owing to the use of environmentally friendly energy, the size of the financial sector increases. It is obvious that environment-friendly energy usage attracts the attention of the financial investors. In this context, it would be appropriate to give some incentives to renewable energy investors. Within this framework, issues such as tax reduction, location support, and low interest loan opportunities will make renewable energy investments more reasonable.