Interconnections Among Renewable Energy Use and Financial Progress: Empirical Evidence from 12 Arab Countries

In order to achieve the objectives of sustainable development, energy transition, and energy security, renewable energy serves as a crucial pillar. In this study, we examine the relationship between renewable energy consumption and the financial development index for 12 Arab countries from 1990 to 2021. We apply the cross-sectional dependence, panel unit root and panel cointegration tests on the variables of renewable energy consumption per capita, and domestic credit to the private sector per capita. We establish with panel model fixed effect that there is a significant and positive relationship at the level of 1% between renewable energy consumption and the financial development index. According to the Dumitrescu-Hurlin panel causality test, there is a unidirectional causal relationship running from financial development index to renewable energy consumption.