Effects of financial development, foreign direct investment, and economic growth on renewable energy consumption: Evidence from Czechia

Year 2025, Volume: 10 Issue: 3, 1157 - 1180, 25.09.2025

Fergül Özgün

https://doi.org/10.58559/ijes.1698034

https://izlik.org/JA32MW35TM

Abstract

This study examines the effects of financial development, foreign direct investments (FDI), and economic growth on renewable energy consumption in Czechia. ARDL analysis was applied using data from the 1993-2023 period. Thus, we attempted to determine whether the short- and long-term effects of variables on renewable energy consumption differ. According to the analysis results, financial development decreases short-term renewable energy consumption and increases long-term renewable energy consumption. In the long term, economic growth also increases renewable energy consumption. Although the long-term effect of FDI on renewable energy consumption is positive, it is statistically insignificant. The model’s error correction mechanism works, and approximately 47% of the deviations occurring in the short term are balanced in the next period. Czechia’s emphasis on increasing financial development may help increase renewable energy consumption in the long term.

Keywords

Financial development , Foreign direct investment , Renewable energy consumption , ARDL

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