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<p>This study investigates how financial and governance factors influence renewable energy (RE) adoption in five LMICs: Honduras, Jamaica, Kenya, Nicaragua, and the Dominican Republic, using data from 1996 to 2023. A hybrid approach that combines Random Forests (RF) and Fixed Effects Modelling (FEM) is used to evaluate how domestic credit, foreign direct investment (FDI), interest rates, and governance quality affect RE adoption. The findings suggest that domestic credit is essential for RE development in Honduras and Jamaica, whereas high interest rates negatively affect RE development in Dominican Republic. FDI encourages RE in Honduras, and the quality of the governance is important in attracting investment in Jamaica and Kenya. Energy imports affect RE adoption differently across countries. Policy recommendations include designing tailored financial strategies to improve access to domestic credit, adjusting interest rates to support RE growth, fostering a conducive governance environment to attract FDI, and encouraging domestic RE projects.</p>

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Navigating financial and governance barriers to renewable energy in LMICs: insights from machine learning and econometrics

  • 期刊论文

  • 发表日期：

    2026年3月10日

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  • Abbas Khan,
  • Li Shuangjie,
  • Ai Xiaoqing,
  • Muhammad Farrukh Shahzad,
  • Abdul Razzaq

摘要

This study investigates how financial and governance factors influence renewable energy (RE) adoption in five LMICs: Honduras, Jamaica, Kenya, Nicaragua, and the Dominican Republic, using data from 1996 to 2023. A hybrid approach that combines Random Forests (RF) and Fixed Effects Modelling (FEM) is used to evaluate how domestic credit, foreign direct investment (FDI), interest rates, and governance quality affect RE adoption. The findings suggest that domestic credit is essential for RE development in Honduras and Jamaica, whereas high interest rates negatively affect RE development in Dominican Republic. FDI encourages RE in Honduras, and the quality of the governance is important in attracting investment in Jamaica and Kenya. Energy imports affect RE adoption differently across countries. Policy recommendations include designing tailored financial strategies to improve access to domestic credit, adjusting interest rates to support RE growth, fostering a conducive governance environment to attract FDI, and encouraging domestic RE projects.