The impact of financial development and economic growth on renewable energy consumption: Empirical analysis of India.

This current study investigates the impact of financial development and economic growth on renewable energy consumption in India. Annual time series data is used to cover the period 1971-2015. A long-run equilibrium relationship is confirmed among the variables of financial development, renewable energy consumption and economic growth by the Maki (2012) cointegration test under five structural breaks in the series. Dynamic ordinary least squares (DOLS) estimation results suggest statistically significant and positive impacts of economic growth and financial development on renewable energy consumption for the case of India. Moreover, the study applied the Granger causality test under a vector error correction model to estimate the existence and direction of causality between variables. The causality test results suggest that renewable energy consumption and economic growth are financial development driven in the long run and there is a bidirectional causality between renewable energy consumption and economic growth in India.