Asymmetric impact of financial development on renewable energy consumption in Ghana

This study investigates the impact of financial development on renewable energy consumption in Ghana, considering the influence of economic growth and energy prices. Employing a nonlinear autoregressive distributed lag (NARDL) approach, we capture the asymmetric effects of both positive and negative shocks in financial development on renewable energy demand from 1990 to 2020. Our findings reveal that positive shocks in financial development significantly increase long-run renewable energy consumption by 0.445%. Concomitantly, adverse shocks in financial development have a substantial negative impact, leading to a long-run decrease in renewable energy consumption by 0.424%. Additionally, the analysis demonstrates that both economic growth and energy prices significantly negatively influence renewable energy consumption. These results suggest that policymakers in Ghana should consider strategies that promote financial development and mitigate the adverse effects of economic growth and energy prices to foster a sustainable transition towards renewable energy.