The effect of financial development and foreign direct investments on the consumption of renewable energy in Iran

Document Type : Research Paper

Authors

1 Faculty of Economics, University of Tehran, Iran

2 Master's Degree, Business Management (Financial Orientation), Alborz University

3 Department of Economics, Faculty of Economic and Political Sciences, Shahid Beheshti University

Abstract

The growing trend of energy consumption, reduction of fossil fuel resources and global warming are the main and important reasons for the tendency of countries to use new and renewable energies as an suitable alternative to fossil fuels. In addition to having a special capacity for economic growth, renewable energy has improved energy security through diversification of the country's energy portfolio and can play important role in protecting the environment by reducing air pollution. Financial development and consumption of renewable energy as a solution to reduce dependence on fossil fuels and preserve the environment has received much attention at the global and regional level. In addition, direct investment in the renewable energy sector can provide many opportunities for economic growth and Reduce the dangerous impacts associated with electricity generation from fossil fuels. This study examines the impact of financial development and foreign direct investment on renewable energy consumption using the ARDL model during the period of 1357 to 1399. The results indicate that the effect of both factors of financial and foreign direct investment on renewable energy consumption is positive and significant in both the short term and the long term.

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History

  • Receive Date: 03 October 2024
  • Revise Date: 18 January 2025
  • Accept Date: 26 January 2025

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