Testing the effects of banking development, economic growth and foreign direct investment on renewable energy in South Africa

• Published date: 01 December 2023
• Author: Ahmed Samour,Mumtaz Ali,Hariem Abdullah,Delani Moyo,Turgut Tursoy
• Date: 01 December 2023
• DOI: http://doi.org/10.1111/opec.12289

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OPEC Energy Rev. 2023;47:306–319.wileyonlinelibrary.com/journal/opec

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INTRODUCTION

The world is facing environmental issues due to climate change, and it has been considered as a major issue of great con-

cern for governments, economists, environmentalists and playmakers throughout the globe (Usman et al.,2020). The ex-

pansion of economies in different parts of the globe is responsible for the growing need for energy (Can & Ahmed,2022).

To meet the required demand, the world over the decades, the uses the nonrenewable energy as a primary energy source

which is considered as the major contributor to emissions of Green House Gas (GHG), leading to global warming and, as

a result, increasing climate change. According to Mujtaba et al.(2022) relying more and more on fossil fuels and releasing

a significant quantity of carbon dioxide into the atmosphere, both of which contribute to the deterioration of the environ-

ment. According to International Renewable Energy Agency (IRENA,2017), two- thirds of all emissions of (GHG) come

from the energy sector. Thus, the world has major consideration to reduce the fossil fuel dependence as main goal to

DOI: 10.1111/opec.12289

ORIGINAL ARTICLE

Testing the effects of banking development, economic

growth and foreign direct investment on renewable energy

in South Africa

AhmedSamour1

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MumtazAli2

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HariemAbdullah3,4

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DelaniMoyo2

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TurgutTursoy2

© 2023 Organization of the Petroleum Exporting Countries.

1Department of Accounting, Dhofar

University, Salalah, Sultanate of Oman

2Department of Banking and Finance,

Near East University, Nicosia,

North Cyprus, Turkey

3Accounting Department, University

of Sulaimani, Kurdistan Region,

Sulaimani, Iraq

4Tishk International University/

Sulaimani, Erbil, Iraq

Correspondence

Mumtaz Ali, Banking and Finance

Department, Near East University,

Nicosia, North Cyprus.

Email: mumtaz.hulio@usindh.edu.pk

Abstract

The world's climate- related policies need to be revised to combat environmental

issues. Therefore, adopting renewable energy technologies in conjunction with

energy efficiency measures are needed to make safe pathways to reduce over 90%

of energy related CO2. In this context, this study intends to assess the influence

of foreign direct investment (FDI), economic growth, and banking and devel-

opment on renewable energy consumption in South Africa from 1970 to 2020.

The study uses a novel ‘bootstrap Autoregressive Distributed Lag (ARDL)’ test-

ing to empirically analyse the short and long links among the tested variables.

The ARDL estimations demonstrate a FDI and economic growth have positive

effect on renewable energy consumption. Furthermore, the outcomes reveal that

banking sector development affects positively renewable energy use in long run.

Therefore, it is suggested that government and playmakers of South Africa must

make more efforts to link the economic and baking development with renewable

energy by investing capital and funds in renewable energy infrastructure. It will

not only boost the economy of the country but also provide an opportunity to

clean and green the environment with decreasing rate of greenhouse gases emis-

sion like carbon dioxide.

[Correction added on 23 Aug 2023, after

first online publication: The order of

authors and corresponding affiliations

have been corrected in this version.]