Title

Can banks sustain the growth in renewable energy supply? An international evidence

Document Type

Journal Article

Publication Title

The European Journal of Development Research

Publisher

Springer

School

School of Business and Law

RAS ID

39815

Comments

Choudhury, T., Kamran, M., Djajadikerta, H. G., & Sarker, T. (2021). Can banks sustain the growth in renewable energy supply? An international evidence. The European Journal of Development Research. Advance online publication. https://doi.org/10.1057/s41287-021-00492-z

Abstract

Confronted with rapidly deteriorating climate change resulting from the use of fossil fuels, the transition to renewable energy has now become imminent. But this shift to renewable energy requires massive financial support from banks, affecting their default risk. Responding to the growing environmental concerns and reluctance among banks to increase their exposure in the renewable energy sector, this study presents unique and novel insights on the relationship between the share of renewable energy in the total energy supply of a country and banking risk. To this end, we obtained data for a sample of 80 international banks from 20 countries in the 2006–2017 period. On this data, we implemented a two-stage least squares (2SLS) regression analysis model. Our findings reveal that increasing the share of renewable energy in the total energy supply of a country significantly reduces banks’ default risk. To check the robustness of the results, we performed several tests which also endorsed the validity of our results.

DOI

10.1057/s41287-021-00492-z

Access Rights

free_to_read

Research Themes

Natural and Built Environments

Priority Areas

Environmental management, governance and policy

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