Assessing Renewable Energy Investments in Sub-Saharan Africa: The Influence of Financial Development and the Moderating Role of Institutional Quality

Details

Supervisors

Candelon, Bertrand ; Paul Pelzl

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

enThis study examines the relationship between financial development and renewable energy investment in Sub-Saharan Africa and analyzes whether institutional quality serves as a moderating factor. The study uses a panel dataset of 46 Sub-Saharan African countries over the period 2000 to 2020 and applies multiple panel regression estimators, including pooled OLS, Fixed Effects, and Random Effects, with PCSE used for robustness check. The findings show that financial development is positively associated with renewable energy investment when comparing across countries, but the effect becomes statistically insignificant once within-country-variation is considered. Moreover, no significant moderating effect of institutional quality is found. However, each institutional dimension, regulatory quality, political stability and control of corruption, independently shows a strong association with renewable energy investment. These findings suggest that financial development alone is not sufficient to drive renewable energy investment, but strong governance and institutional frameworks are also required to scale up renewable energy investment in the region.