IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v18y2025i5p1179-d1601883.html
   My bibliography  Save this article

The Effect of Economic Freedom, Indicators of Financial Sector Development, Income and Education on Renewable Energy Use: An Empirical Analysis of Post-Transition EU Member States

Author

Listed:
  • Gamze Sart

    (Department of Educational Sciences, Hasan Ali Yucel Faculty of Education, İstanbul University-Cerrahpaşa, 34500 Istanbul, Turkey)

  • Yilmaz Bayar

    (Department of Public Finance, Faculty of Economics and Administrative Sciences, Bandirma Onyedi Eylul University, 10200 Bandirma-Balikesir, Turkey)

  • Marina Danilina

    (Department of Economics, Plekhanov Russian University of Economics (PRUE), 117997 Moscow, Russia
    Department of Economics, Financial University Under the Government of the Russian Federation, 125167 Moscow, Russia)

Abstract

Fossil fuels are among the most crucial factors underlying global environment impairment through CO 2 emissions. In addition to this, the globalized world has witnessed significant price volatility, instability and disruptions in the supply of fossil fuels. Therefore, renewable energy transition (RET) has become a mandatory option for countries to tackle these environmental, economic, and energy insecurity problems in energy markets dominated by fossil fuels. But the RET process has remarkably slowed down in recent years due to increasing economic volatility, financial obstacles, geopolitical risks, and bottlenecks in the development of low-carbon technologies. In this regard, this study investigates the effect of market structure proxied by economic freedom and indicators of financial development, together with real GDP per capita and education, on the utilization of renewable energy in post-transition EU member states across the 2000–2021 duration by utilizing causality and cointegration tests. The outcomes of the causality analysis reveal a feedback relationship among renewable energy use, economic freedom, indicators of financial development, and real GDP per capita but a unilateral causality between education and renewable energy use. On the other hand, the outcomes of AMG estimation reveal a positive effect of economic freedom, real GDP per capita, and education on the utilization of renewable energy in some countries but a negative effect of financial institutions’ development on renewable energy use and mixed results on the effect of financial markets’ development regarding renewable energy use. Our results indicate that education is a significant instrument to make progress in renewable energy use via multiple channels, but governments should incentivize the financial system to support the RET process by favorable lending and sustainable finance instruments like green bonds or sustainability-linked loans.

Suggested Citation

  • Gamze Sart & Yilmaz Bayar & Marina Danilina, 2025. "The Effect of Economic Freedom, Indicators of Financial Sector Development, Income and Education on Renewable Energy Use: An Empirical Analysis of Post-Transition EU Member States," Energies, MDPI, vol. 18(5), pages 1-19, February.
    • Handle: RePEc:gam:jeners:v:18:y:2025:i:5:p:1179-:d:1601883
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/18/5/1179/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/18/5/1179/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Haifa Saadaoui & Nouri Chtourou, 2023. "Do Institutional Quality, Financial Development, and Economic Growth Improve Renewable Energy Transition? Some Evidence from Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(3), pages 2927-2958, September.
    2. Sun, Chuanwang & Khan, Anwar & Cai, Weiyi, 2024. "The response of energy aid and natural resources consumption in load capacity factor of the Asia Pacific emerging countries," Energy Policy, Elsevier, vol. 190(C).
    3. Tessaleno Devezas & Andrea Tick & Askar Sarygulov & Polina Rukina, 2024. "The Slow Pace of Green Transformation: Underlying Factors and Implications," Energies, MDPI, vol. 17(19), pages 1-26, September.
    4. Lahiani, Amine & Mefteh-Wali, Salma & Shahbaz, Muhammad & Vo, Xuan Vinh, 2021. "Does financial development influence renewable energy consumption to achieve carbon neutrality in the USA?," Energy Policy, Elsevier, vol. 158(C).
    5. Westerlund, Joakim & Edgerton, David L., 2007. "A panel bootstrap cointegration test," Economics Letters, Elsevier, vol. 97(3), pages 185-190, December.
    6. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    7. M. Hashem Pesaran & Aman Ullah & Takashi Yamagata, 2008. "A bias-adjusted LM test of error cross-section independence," Econometrics Journal, Royal Economic Society, vol. 11(1), pages 105-127, March.
    8. Pesaran, M. Hashem & Vanessa Smith, L. & Yamagata, Takashi, 2013. "Panel unit root tests in the presence of a multifactor error structure," Journal of Econometrics, Elsevier, vol. 175(2), pages 94-115.
    9. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    10. Anton, Sorin Gabriel & Afloarei Nucu, Anca Elena, 2020. "The effect of financial development on renewable energy consumption. A panel data approach," Renewable Energy, Elsevier, vol. 147(P1), pages 330-338.
    11. Zhongye Sun & Xin Zhang & Yifei Gao, 2023. "The Impact of Financial Development on Renewable Energy Consumption: A Multidimensional Analysis Based on Global Panel Data," IJERPH, MDPI, vol. 20(4), pages 1-20, February.
    12. Mukhtarov, Shahriyar & Yüksel, Serhat & Dinçer, Hasan, 2022. "The impact of financial development on renewable energy consumption: Evidence from Turkey," Renewable Energy, Elsevier, vol. 187(C), pages 169-176.
    13. ., 2023. "Financial development: concept and measurement," Chapters, in: Financialisation, chapter 2, pages 22-50, Edward Elgar Publishing.
    14. Umut Uzar, 2024. "Free Speech, Green Power: The Impact of Freedom of Expression on Renewable Energy," Sustainability, MDPI, vol. 16(19), pages 1-21, October.
    15. Aydin, Mehmet & Degirmenci, Tunahan & Erdem, Azad & Sogut, Yasin & Demirtas, Nazli, 2024. "From public policy towards the green energy transition: Do economic freedom, economic globalization, environmental policy stringency, and material productivity matter?," Energy, Elsevier, vol. 311(C).
    16. Sadorsky, Perry, 2011. "Financial development and energy consumption in Central and Eastern European frontier economies," Energy Policy, Elsevier, vol. 39(2), pages 999-1006, February.
    17. Esenyel İçen, Nimet Melis, 2025. "What are the determinants of renewable energy consumption? An application for variable selection," Renewable Energy, Elsevier, vol. 239(C).
    18. Ackah, Ishmael & Kizys, Renatas, 2015. "Green growth in oil producing African countries: A panel data analysis of renewable energy demand," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1157-1166.
    19. Liu, Wei & Shen, Yedan & Razzaq, Asim, 2023. "How renewable energy investment, environmental regulations, and financial development derive renewable energy transition: Evidence from G7 countries," Renewable Energy, Elsevier, vol. 206(C), pages 1188-1197.
    20. Ahmad, Mahmood & Jiang, Ping & Majeed, Abdul & Umar, Muhammad & Khan, Zeeshan & Muhammad, Sulaman, 2020. "The dynamic impact of natural resources, technological innovations and economic growth on ecological footprint: An advanced panel data estimation," Resources Policy, Elsevier, vol. 69(C).
    21. Ali M. Kutan & Sudharshan Reddy Paramati & Mallesh Ummalla & Abdulrasheed Zakari, 2018. "Financing Renewable Energy Projects in Major Emerging Market Economies: Evidence in the Perspective of Sustainable Economic Development," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(8), pages 1761-1777, June.
    22. Vatamanu, Anca Florentina & Zugravu, Bogdan Gabriel, 2023. "Financial development, institutional quality and renewable energy consumption. A panel data approach," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 765-775.
    23. Gamze Sart & Halil Özekicioğlu & Marina Danilina & Levent Aytemiz & Yilmaz Bayar, 2024. "The Causal Nexus Among Energy Dependency, Human Capital, and Renewable Energy: An Empirical Analysis for EU Members," Energies, MDPI, vol. 17(21), pages 1-17, October.
    24. Kwadwo Boateng Prempeh, 2023. "The impact of financial development on renewable energy consumption: new insights from Ghana," Future Business Journal, Springer, vol. 9(1), pages 1-13, December.
    25. ., 2023. "The economic effects of financial development," Chapters, in: Financialisation, chapter 3, pages 51-71, Edward Elgar Publishing.
    26. Ryan H. Murphy, 2016. "A Comment on "Measuring Economic Freedom: A Comparison of Two Major Sources"," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 31(Fall 2016), pages 69-91.
    27. Chien Van Nguyen, 2024. "The Impact of Financial Development on Renewable Energy Consumption: The Case of Vietnam and Other ASEAN Members," IJFS, MDPI, vol. 12(2), pages 1-13, April.
    28. Kahia, Montassar & Aïssa, Mohamed Safouane Ben & Lanouar, Charfeddine, 2017. "Renewable and non-renewable energy use - economic growth nexus: The case of MENA Net Oil Importing Countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 127-140.
    29. Sun, Chuanwang & Min, Jialin, 2024. "Dynamic trends and regional differences of economic effects of ultra-high-voltage transmission projects," Energy Economics, Elsevier, vol. 138(C).
    30. ., 2023. "From financial development to financialisation," Chapters, in: Financialisation, chapter 4, pages 72-98, Edward Elgar Publishing.
    31. Lichao Wu & David C. Broadstock, 2015. "Does economic, financial and institutional development matter for renewable energy consumption? Evidence from emerging economies," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 8(1), pages 20-39.
    32. ., 2023. "Finance, institutions and economic development," Chapters, in: Macroeconomics for Development, chapter 3, pages 30-47, Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Ren Jie & Razzaq, Asif, 2022. "Influence of economic policy uncertainty and financial development on renewable energy consumption in the BRICST region," Renewable Energy, Elsevier, vol. 201(P1), pages 526-533.
    2. Ulaş Ünlü & Furkan Yıldırım & Ayhan Kuloğlu & Ersan Ersoy & Emin Hüseyin Çetenak, 2022. "Nexus between Renewable Energy, Credit Gap Risk, Financial Development and R&D Expenditure: Panel ARDL Approach," Sustainability, MDPI, vol. 14(23), pages 1-19, December.
    3. Yilmaz Bayar & Mehmet Hilmi Ozkaya & Laura Herta & Marius Dan Gavriletea, 2021. "Financial Development, Financial Inclusion and Primary Energy Use: Evidence from the European Union Transition Economies," Energies, MDPI, vol. 14(12), pages 1-14, June.
    4. Talan, Amogh & Rao, Amar & Sharma, Gagan Deep & Apostu, Simona-Andreea & Abbas, Shujaat, 2023. "Transition towards clean energy consumption in G7: Can financial sector, ICT and democracy help?," Resources Policy, Elsevier, vol. 82(C).
    5. Yuan, Shengjun & Musibau, Hammed Oluwaseyi & Genç, Sema Yılmaz & Shaheen, Riffat & Ameen, Anam & Tan, Zhixiong, 2021. "Digitalization of economy is the key factor behind fourth industrial revolution: How G7 countries are overcoming with the financing issues?," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    6. Mohammed Musah, 2023. "Stock market development and environmental quality in EU member countries: a dynamic heterogeneous approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11153-11187, October.
    7. Appiah, Michael & Karim, Sitara & Naeem, Muhammad Abubakr & Lucey, Brian M., 2022. "Do institutional affiliation affect the renewable energy-growth nexus in the Sub-Saharan Africa: Evidence from a multi-quantitative approach," Renewable Energy, Elsevier, vol. 191(C), pages 785-795.
    8. Tan, Yan & Uprasen, Utai, 2022. "The effect of foreign direct investment on renewable energy consumption subject to the moderating effect of environmental regulation: Evidence from the BRICS countries," Renewable Energy, Elsevier, vol. 201(P2), pages 135-149.
    9. Aliya Zhakanova Isiksal, 2021. "The financial sector expansion effect on renewable electricity production: case of the BRICS countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(6), pages 9029-9051, June.
    10. Khezri, Mohsen & Heshmati, Almas & Khodaei, Mehdi, 2021. "The role of R&D in the effectiveness of renewable energy determinants: A spatial econometric analysis," Energy Economics, Elsevier, vol. 99(C).
    11. Habiba, Umme & Xinbang, Cao, 2023. "The contribution of different aspects of financial development to renewable energy consumption in E7 countries: The transition to a sustainable future," Renewable Energy, Elsevier, vol. 203(C), pages 703-714.
    12. Mohd Irfan & Muhammad Shahbaz, 2022. "Low-carbon energy strategies and financial development in developing economies: investigating long-run influence of credit and equity market development," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(4), pages 1-26, April.
    13. Saidi, Hichem & El Montasser, Ghassen & Ajmi, Noomen, 2018. "Renewable Energy, Quality of Institutions and Economic Growth in MENA Countries: a Panel Cointegration Approach," MPRA Paper 84055, University Library of Munich, Germany.
    14. Mahmut Unsal Sasmaz & Aysun Karamıklı & Ulas Akkucuk, 2021. "The relationship between renewable energy use and health expenditures in EU countries," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(7), pages 1129-1139, September.
    15. Liu, Wei & Shen, Yedan & Razzaq, Asim, 2023. "How renewable energy investment, environmental regulations, and financial development derive renewable energy transition: Evidence from G7 countries," Renewable Energy, Elsevier, vol. 206(C), pages 1188-1197.
    16. Funda Hatice Sezgin & Yilmaz Bayar & Laura Herta & Marius Dan Gavriletea, 2021. "Do Environmental Stringency Policies and Human Development Reduce CO 2 Emissions? Evidence from G7 and BRICS Economies," IJERPH, MDPI, vol. 18(13), pages 1-13, June.
    17. Ma, Yechi & Chen, Zhiguo & Shinwari, Riazullah & Khan, Zeeshan, 2021. "Financialization, globalization, and Dutch disease: Is Dutch disease exist for resources rich countries?," Resources Policy, Elsevier, vol. 72(C).
    18. Ibrahiem, Dalia M. & Hanafy, Shaimaa A., 2021. "Do energy security and environmental quality contribute to renewable energy? The role of trade openness and energy use in North African countries," Renewable Energy, Elsevier, vol. 179(C), pages 667-678.
    19. Ismet GOCER & Sedat ALATAS & Osman PEKER, 2016. "Effects of R&D and innovation on income in EU countries: new generation panel cointegration and causality analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 153-164, Winter.
    20. Ugur Korkut Pata & Banu Tanriover, 2023. "Is the Load Capacity Curve Hypothesis Valid for the Top Ten Tourism Destinations?," Sustainability, MDPI, vol. 15(2), pages 1-15, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:18:y:2025:i:5:p:1179-:d:1601883. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.