Salomon, Ngui o Joel; Bosco, E oa E oa Jean
A icle
The e ec o inancial de elopmen on enewable ene gy
consump ion in came oon
Economic Re iew: Jou nal o Economics and Business
P o ided in Coope a ion wi h:
Facul y o Economics, Uni e si y o Tuzla
Sugges ed Ci a ion: Salomon, Ngui o Joel; Bosco, E oa E oa Jean (2024) : The e ec o inancial
de elopmen on enewable ene gy consump ion in came oon, Economic Re iew: Jou nal o
Economics and Business, ISSN 2303-680X, Uni e si y o Tuzla, Facul y o Economics, Tuzla, Vol. 22,
Iss. 1, pp. 73-88,
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. Economic Re iew: Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024///
* Facul y o Economics and Managemen , Uni e si y o Yaoundé II, Came oon,
salomonjoelngui [email p o ec ed]
** Rec o o he Uni e si y o Ebolowa, Came oon, jbe [email protected].
73 ///
THE EFFECT OF FINANCIAL DEVELOPMENT ON RENEWABLE ENERGY CONSUMPTION
IN CAMEROON
Ngui o Joel Salomon* , E oa E oa Jean Bosco**
DOI: 10.51558/2303-680X.2024.22.1.73
Abs ac
The imp o emen o he ene gy s uc u e and he
de elopmen o he enewable ene gy sec o play an
impo an and s a egic ole in Came oon's
esponsibili ies agains clima e change. So, he
au ho i ies and policy make s ha e made g ea
e o s o achie e his. Bu one o he main cons ain s
o Came oon's ene gy ansi ion lies in inancial
issues, which a e ine i ably linked o he coun y's
inancial de elopmen . A he hea o his e lec ion
he e o e a ises he ques ion o knowing: Wha could
be he impac o inancial de elopmen on he
consump ion o enewable ene gies in Came oon?
This s udy he e o e aims o examine he impac o
inancial de elopmen on he consump ion o
enewable ene gies in Came oon o e he pe iod
om 2000 o 2022. Ou esea ch is based on a Vec o
Au o eg essi e (VAR) model; se en a iables o
inancial de elopmen ha e been used o explain he
consump ion o enewable ene gies in Came oon.
The esul s o he empi ical analysis show ha
o eign di ec in es men s, he e olu ion o bond
ma ke s and ene gy p ices ep esen ed by he
consume p ice ha e a nega i e e ec on he
consump ion o enewable ene gies. On he o he
hand, domes ic c edi p o ided by he inancial
sec o , banking a ailabili y, economic de elopmen ,
and income ha e a posi i e impac on enewable
ene gy consump ion. Ou empi ical esul s p o ide
aluable insigh s in o he bes ways o deploy capi al
in he enewable ene gy sec o , in o de o p o ide
cus ome s wi h cos -compe i i e op ions, and o
acili a e he implemen a ion o policies ha
con ibu e o en i onmen al sus ainabili y and
ene gy secu i y.
Keywo ds: inancial de elopmen , enewable
ene gies, VAR model, Came oon.
JEL: C22; Q01; Q20; Q43.
1. In oduc ion
Ene gy is a c i ical componen i coun ies a e o
achie e sus ainable de elopmen . The ongoing
demand o ene gy has in ensi ied in p e ious
decades and con inues o g ow now. Popula ion
expansion, imp o ed li es yles, inc eased ou pu ,
and economic compe i i eness all con ibu e o
he g owing demand o ene gy. As a esul ,
wo ldwide ene gy consump ion ose by 44%
be ween 1971 and 2018 (Wo ld Bank, 2017a,
2017b). Fu he mo e, igu es show ha ossil
uels accoun o oughly 78.4% o he o al
ene gy consump ion (REN21, 2017). Excessi e
combus ion o ossil uels emi s excessi e
amoun s o ca bon dioxide (CO2) in o he
a mosphe e, causing nega i e en i onmen al
e ec s such as global wa ming. Consump ion o
enewable ene gy con ibu es no only o a
cleane en i onmen (by educing g eenhouse
gas emissions), bu also o independence om
ossil uel ma ke s (e.g. oil and gas) and ene gy
secu i y. In Came oon, inc eased consump ion o
enewable ene gies is one o he main ene gy
policy objec i es. "Came oon has signi ican
enewable ene gy po en ial as well as limi ed oil
and gas ese es. The e is a s ong go e nmen al
commi men o de eloping he ene gy sec o ,
hanks in la ge pa o in e na ional dono
suppo . Howe e , uni e sal access o ene gy is
s ill a om being eached. The de elopmen o
enewable ene gies o he han hyd oelec ici y is
emb yonic, and load shedding is egula ." (IFDD,
2022).
Renewable ene gy has he po en ial o di e si y
he ene gy mix. Less eliance on ossil uels
esul s in inc eased esilience o ene gy ma ke
shocks. Fu he mo e, g een ene gy p oduc ion
has he po en ial o a oid addi ional
en i onmen al ha m. Howe e , ansi ioning
om ossil uels o enewable ene gies can be
di icul , and one o he mos signi ican
challenges is cos . The e a e se e al inancial
///. Ngui o Joel Salomon, E oa E oa Jean Bosco
/// 74 Economic Re iew: Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024
challenges o o e come when compa ed o ossil
uel-based ene gy p ojec s, including g ea e
in as uc u e, s a -up, and ope a ing expenses.
In his en i onmen , a s ong inancial sys em is
equi ed o ensu e e ec i e p ice disco e y and
inancing, as well as ma ke liquidi y.
Addi ionally, inancial ma ke s inc ease capi al
alloca ion. A highly de eloped inancial sys em
encou ages in es men in g ow h a eas, whe eas
an unde de eloped inancial sys em discou ages
in es men in declining indus ies (Wu gle ,
2000).
Recen s udies ha e ocused on he ela ionship
be ween ene gy consump ion and economic
g ow h, and ha e expanded o include a hi d
dimension: inancial de elopmen . The need o
in oduce inancial de elopmen o explain his
ela ionship is suppo ed by se e al easons:
i s ly, inancial de elopmen a ac s o eign
di ec in es men (FDI), and hence high-le el
R&D in es men , which ampli ies economic
g ow h and a ec s he dynamics o
en i onmen al pe o mance. Secondly, inancial
de elopmen p o ides oppo uni ies o
de eloping coun ies o exploi new echnologies,
known as "g een" echnologies, and hus help
hem o imp o e he en i onmen and
sus ainable de elopmen . Finally, inancial
de elopmen can also lead o inc eased pollu ion
and en i onmen al deg ada ion. In es men
cos s a e one o he mos signi ican hu dles in
deploying enewable ene gy. Indeed, enewable
ene gies ha e a somewha high ini ial in es men
cos when compa ed o adi ional ene gy
sou ces. Fu he mo e, enewable ene gy
p ojec s ha e long payback pe iods and equi e a
la ge amoun o capi al. Financial de elopmen
could hus play an essen ial ole in inc easing
enewable ene gy use. Financial in as uc u e
can boos economic g ow h and in luence ene gy
demand (Sado sky, 2010). Indeed, a high le el o
inancial de elopmen p omo es he g ow h o
inancial ma ke s, banks, and s ock exchanges,
esul ing in mo e cash a ailable o in es men
(Sado sky, 2010). Acco ding o Shahbaz and Lean
(2012), inancial de elopmen should ha e a
a o able impac on economic g ow h and,
consequen ly, ene gy consump ion. They
highligh ed he key ac o s ha explain how
inancial ma ke imp o emen s a e linked o
inc eased in es men and economic g ow h. The
ini ial mechanism is he le el e ec . This
ansla es in o ma u ed inancial ma ke s aising
capi al o high- e u n ini ia i es. The second
p ocess is known as he e iciency e ec . I
indica es ha inancial de elopmen imp o es
asse liquidi y and di e si y while also
channeling inancial esou ces o ele an
en e p ises.
Acco ding o Sado sky (2011), inancial
de elopmen enhances an access o inancial
esou ces, esul ing in inc eased demand o
expensi e goods and ene gy. Acco ding o
Sado sky (2011), inancial de elopmen
in luences ene gy use in h ee ways: di ec ly,
h ough comme ce, and indi ec ly h ough
weal h. The di ec e ec is linked o s onge
inancial de elopmen , which allows consume s
o bo ow mo e easily and a lowe cos s so as o
pu chase consume du ables, esul ing in
inc eased ene gy consump ion. The comme cial
e ec a ises when inancial de elopmen enables
en e p ises o ob ain inancial esou ces mo e
simply and a o dably (Capo ale e al. 2009). The
weal h e ec happens as economic con idence
ises, expanding he economy and d i ing up
demand o ene gy. Imp o ed inancial
de elopmen makes i easie o sa e, bo ow, and
in es . Wi h cheap inancing cos s, cus ome s a e
mo e likely o buy consume du ables, hus
inc easing ene gy demand. Howe e , Islam e al.
(2013) sugges ha inancial p ospe i y
encou ages he pu chasing o ene gy-e icien
appliances, hence lowe ing ene gy usage.
Acco ding o Chiu and Lee (2020), inancial
ins i u ions play a signi ican ole in coun ies
wi h a s able inancial clima e because hey
p o ide indus ies wi h an easy access o inance
h ough he s ock ma ke and banking sec o . As
a esul , businesses would ha e mo e esou ces
o in es in mode n, ene gy-e icien equipmen
and echnologies, esul ing in lowe ene gy
usage.
In an en i onmen whe e enewable ene gy
in es men is hea ily p omo ed, inancial
de elopmen can play an impo an ole. In he
ene gy li e a u e, he e is an inc easing in e es
in examining he ac o s ha go e n he use o
enewable ene gy. As many empi ical s udies
ha e ocused on he in e ac ions be ween he use
o enewable ene gy and inancial de elopmen ,
Habiba and Xinbang (2023) used he "Momen
Quan ile Reg ession" (MMQR) me hod o s udy
he impac o di e en aspec s o inancial
de elopmen on enewable ene gy consump ion
The e ec o inancial de elopmen on enewable ene gy consump ion in Came oon //
Economic Re iew – Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024 75 ///
using panel da a om se en eme ging economies
(E7) om 1991 o 2018. I is con i med ha he
in luence o independen a iables a ies ac oss
quan iles o enewable ene gy. O e all, hey
disco e ed ha all h ee aspec s o inancial
g ow h— inancial de elopmen in gene al,
inancial ma ke - ela ed de elopmen , and
inancial ins i u ion- ela ed de elopmen —ha e
a bene icial impac on enewable ene gy usage.
Regean and Bulime (2024) in es iga ed he
impac o inancial de elopmen on he clean
ene gy ansi ion in 20 low- and middle-income
na ions in Sub-Saha an A ica. The s udy used
wo-s age, ixed e ec s, ins umen al a iable
leas squa es models o in es iga e he impac o
inancial de elopmen on he shi o enewable
ene gy. Thei indings sugges ha inancial
de elopmen has a posi i e e ec on he shi o
enewable ene gy. Howe e , inancial
de elopmen has a conside able impac on
inancial ins i u ions a he han inancial
ma ke s.
Acco ding o a 2016 analysis on Came oon's
ene gy condi ion, he coun y has a high po en ial
o enewable ene gy as well as mino oil and gas
ese es. The e is a s ong go e nmen al
commi men o de eloping he ene gy sec o ,
hanks in la ge pa o in e na ional dono
suppo . Howe e , uni e sal access o ene gy
emains a dis an goal, he de elopmen o
enewable ene gies o he han hyd oelec ici y is
in i s ea ly s ages, and load shedding is common.
This is p ima ily due o he p esence o inancial
cons ain s and he ongoing sea ch o inancing
sou ces and me hodologies ailo ed o ene gy
managemen p ojec s (MINEE, 2016). The
complexi y o p ocedu es o ob aining
in e na ional inancing in Came oon is impedes
he g ow h o enewable ene gy. The access o
he local inancial indus y is likewise di icul .
The local banking indus y has ye o p ope ly
comp ehend he signi icance and necessi y o
imp o ing access o c edi o he enewable
ene gy sec o . (IFDD, 2022). Ou esea ch
consequen ly ocuses on he ollowing ques ion:
Wha impac migh he inancial de elopmen o
enewable ene gy consump ion ha e in
Came oon?
This s udy examines how inancial de elopmen
a ec s enewable ene gy consump ion. I
con ibu es he ollowing o he exis ing
li e a u e: i s , while ou esea ch con ibu es o
a subs an ial body o li e a u e a emp ing o
explain he ela ionship be ween inancial
de elopmen and ene gy consump ion, we ocus
on enewable ene gy use, which is unde s udied
in he exis ing li e a u e. Second, his pape is one
o he i s o quan i a i ely examine he impac
o inancial de elopmen on enewable ene gy
consump ion in Came oon, and hi d, we ha e
added a new a iable, bank a ailabili y, which
ep esen s he numbe o comme cial banks and
measu es he accessibili y o bank c edi o
adul s.
Ou a icle is o ganized as ollows: sec ion 2
p o ides a e iew o he li e a u e on he subjec ,
sec ion 3 he me hodology, sec ion 4 p esen s he
esul s and discussion, and inally we will ha e
he conclusion.
2. Li e a u e Re iew
2.1 Theo e ical e iew
Financial de elopmen , which is de ined as
imp o ing he e iciency and s abili y o he
inancial sys em, includes decisions o
encou age o eign di ec in es men , banking
sys em expansion, and s ock and bond ma ke
ac i i y (Sa kody, 2010). Financial
de elopmen en ails educed inancial isk,
inc eased anspa ency, lowe bo owing
cos s, and an imp o ed access o inance
(Sado sky, 2010), all o which ha e a bene icial
impac on he cos o enewable ene gy, which
is a p ima y d i e o enewable ene gy usage.
The banking indus y, as a c i ical componen
o he inancial sys em, p o ides esou ces and
encou ages in es men in enewable ene gy
goods and echnology. The expansion o he
capi al ma ke aises he a ac i eness o
en e p ises, allowing hem o ge ex a
esou ces o suppo in es men s in he ene gy
sec o , and also boos s con idence in he
inancial sys em, inc easing demand o ene gy
(Sado sky, 2010).
Financial de elopmen s imula es a numbe o
changes wi hin a coun y, including educed
inancial isk and imp o ed quali y o li e,
lowe bo owing cos s, g ea e anspa ency
be ween lende s and bo owe s, access o
g ea e inancial capi al and in es men lows,
and access o he la es ene gy-e icien
p oduc s and ad anced echnologies, all o
///. Ngui o Joel Salomon, E oa E oa Jean Bosco
/// 76 Economic Re iew: Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024
which can a ec ene gy demand by inc easing
consump ion and ixed in es men by i ms.
(Le ine 1997; Xu 2000; and Fung 2009).
Financial de elopmen can a ec ene gy
demand in se e al ways. One o he mos di ec
ways ha inancial de elopmen can a ec
ene gy demand is by making i easie and
cheape o consume s o bo ow o pu chase
high- alue goods such as au omobiles, homes,
e ige a o s, ai condi ione s, and washing
machines (Mankiw & Sca h 2008). These
consume goods a e ypically ene gy in ensi e,
which can nega i ely impac ene gy demand.
Businesses also bene i om imp o ed
inancial de elopmen , as i is easie o hem
o ob ain and spend unds. The access o
inancial capi al ha can be used o expand
exis ing businesses (pu chase o cons uc ion
o ac o ies, buildings, e c.), o expand exis ing
businesses, o o c ea e new he ones. The
de elopmen o s ock ma ke s is pa icula ly
a ac i e o businesses because i allows hem
o access an addi ional sou ce o inancing,
equi y inancing, which can be used o expand
he business in addi ion o capi al in es men .
Inc eased s ock ma ke ac i i y can inc ease
isks o bo h consume s and businesses,
which is an impo an componen o weal h
c ea ion in an economy. Inc eased s ock
ma ke ac i i y also c ea es a weal h e ec ,
which in u n a ec s consume and business
con idence (Mankiw & Sca h, 2008). The s ock
ma ke is o en conside ed a leading economic
indica o , and inc eased s ock ma ke ac i i y
can be seen as a sign o economic g ow h and
imp o ed compe i i eness which in u n
c ea es inc eased economic con idence and
inc eased economic ac i i y and demand o
ene gy.
Acco ding o Sado sky (2010), inancial
de elopmen can a ec ene gy use in wo ways:
Posi i e in luence:
This occu s h ough h ee channels: he di ec
in luence, he business e ec , and he weal h
e ec . Cus ome s bene i di ec ly om e ec i e
inancial in e media ion since hey can quickly
ind esou ces and hence buy sus ainable
p oduc s, hus inc easing demand o ene gy.
The comme cial impac is a ibu able o an
inc easing end owa d inancial
de elopmen , which imp o es en e p ises'
access o inancial capi al. Financial
de elopmen enables businesses o ob ain
cheape inancial esou ces in o de o expand
hei ope a ions o es ablish a new company,
hence inc easing ene gy consump ion. The
weal h impac is caused by i ms and amilies'
con idence in es ablished s ock ma ke s. In
2010, Sado sky disco e ed a di ec co ela ion
be ween inancial p og ess and ene gy use. In
his key s udy, Sado sky, (2010) employed he
dynamic panel app oach o examine he impac
o inancial de elopmen on ene gy
consump ion in 22 de eloping coun ies om
1990 o 2006. His indings showed ha he e is
a conside able posi i e associa ion be ween
inancial p og ess and ene gy usage. Sado sky
used a simila s a egy o in es iga e he
ela ionship be ween inance and ene gy in
nine Cen al and Eas e n Eu opean na ions
be ween 1996 and 2006, and disco e ed a
posi i e ela ionship be ween he a iables
(Sado sky 2011).
Nega i e in luence
In his si ua ion, inancial de elopmen may cu
ene gy use by enabling he de elopmen o
inno a i e echnology. The echnological e ec
e e s o he nega i e impac o inancial
de elopmen on ene gy consump ion, which
pushes he implemen a ion o ene gy-sa ing
and e icien echnologies. I educes ene gy
use and CO2 emissions. I also inc eases ene gy
e iciency by p ese ing echnical inno a ion.
2.2 Empi ical e iew
In ecen yea s, empi ical esea ch has ocused
on he ela ionship be ween inancial
de elopmen and ene gy usage, wi h a ied
esul s. On he one hand, se e al s udies ha e
ound ha mo e inancial de elopmen leads o
inc eased ene gy use. Fo example, Shahbaz e
al. (2010) used he ARDL bounds es ing
app oach o in es iga e he e ec s o inancial
de elopmen on ene gy usage in Pakis an and
disco e ed a conside able posi i e e ec .
Simila ly, Islam e al. (2013) employed he
ec o e o co ec ion model (VECM) o
de e mine how economic g ow h and inancial
de elopmen e ec ene gy consump ion in
Malaysia. Meanwhile, Tang and Tan (2014)
conduc ed esea ch on he Malaysian economy
om 1972 o 2009 u ilizing he Johansen-
The e ec o inancial de elopmen on enewable ene gy consump ion in Came oon //
Economic Re iew – Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024 77 ///
Juselius coin eg a ion es and he bounda y
es ing app oach. They disco e ed a long- e m
co ela ion be ween ene gy usage and inancial
p og ess. Xu (2012) used he GMM sys em o
in es iga e inancial de elopmen and ene gy
consump ion in 29 Chinese p o inces om
1999 o 2009. His indings e ealed a posi i e
and s a is ically signi ican ela ionship
be ween inancial de elopmen and ene gy
consump ion when inancial de elopmen is
measu ed by he a io o a inancial
ins i u ion's loans o GDP and he a io o FDI
o GDP.
Coban and Topcu (2013) used he Sys em GMM
model o s udy he ela ionship be ween
inancial de elopmen and ene gy use in he
Eu opean Union (EU) om 1990 o 2011. Thei
empi ical indings gi e solid e idence ha
inancial de elopmen has a posi i e impac on
ene gy usage in he elde ly, ega dless o
whe he i o igina es om he banking sec o
o he s ock ma ke . Chang's (2015) analysis is
based on a sample o 53 na ions om 1999 o
2008, sepa a ed in o wo ca ego ies: high-
income and non-high-income. Thei indings
e ealed ha in a non-high-income egime,
ene gy consump ion ises in andem wi h
inancial de elopmen , which is measu ed by
p i a e and domes ic c edi . Howe e , inancial
p og ess is measu ed by he alue o aded
sha es and s ock ma ke u no e ; in ad anced
na ions, ene gy consump ion declines sligh ly
while inc easing in highe -income coun ies in
eme ging and de eloping economies. Rashid
and Yousa (2015) disco e ed a posi i e and
signi ican co ela ion be ween inancial
de elopmen and powe use. Ra indadi and
Oz u k (2016) disco e ed ha inancial
de elopmen had a a o able impac on ene gy
usage in Japan om 1970 o 2012. Pa ama i e
al. (2016) examined he impac o o eign
capi al and s ock ma ke de elopmen on
enewable ene gy usage in 20 eme ging
economies, using da a om 1991 o 2012. They
disco e ed ha o eign capi al and s ock
ma ke de elopmen ha e a signi ican impac
on enhancing enewable ene gy use ac oss all
coun y g oupings. Kahouli (2017) used he
au o eg essi e dis ibu ed lag limi s (ARDL)
app oach o in es iga e he ela ionship
be ween ene gy use and inancial de elopmen
in sou he n Medi e anean coun ies. I
disco e ed e idence o a long- e m bene icial
ela ionship be ween inancial de elopmen
and ene gy use in Is ael, Mo occo, and Tunisia.
Liu e al. (2018) used he ARDL limi s
echnique and disco e ed ha be ween 1980
and 2014, inancial de elopmen in China had a
a o able sho - and long- un impac on ene gy
demand.
O he esea ch, howe e , shows a nega i e
ela ionship be ween inancial p og ess and
ene gy usage. Fo example, in a sample o 20
de eloping na ions, Mielnik and Goldembe g
(2002) disco e ed a clea d op in ene gy
in ensi y when FDI (a measu e o inancial
p og ess) g ew. Sado sky (2010)
demons a ed ha inancial de elopmen
could cu ene gy use by enabling he
de elopmen o inno a i e echnologies. The
nega i e in luence o inancial de elopmen on
ene gy consump ion is known as he
echnology e ec (Tamazian e al. 2009, Jalil
and Fe idun 2011, Shahbaz e al. 2013,
Mahalick and Mallick 2014, Shahbaz e al.
2017). La e , Topcu and Payne (2017)
in es iga ed he impac o inancial
de elopmen on ene gy use in a panel o 32
high-income coun ies om 1990 o 2014.
Thei indings indica e ha he e is no
s a is ical co ela ion be ween he o al
inancial de elopmen index and ene gy use.
They do, howe e , demons a e ha an
inc ease in he s ock ma ke index esul s in a
modes d op in ene gy use. Des ek (2018)
in es iga ed he ela ionship be ween inancial
de elopmen , ene gy p ices, eal income, and
ene gy consump ion in 17 ising economies
om 1991 o 2015 using a h ee-dimensional
inancial de elopmen managemen model
(banking sec o , s ock ma ke , and bond
ma ke ). The empi ical indings indica e ha
he de elopmen o he banking and bond
ma ke s has a nega i e and s a is ically
signi ican impac on ene gy usage.
Ouyang and Li (2018) used he GMM panel VAR
echnique o analyze he endogenous
ela ionship be ween inancial de elopmen ,
ene gy consump ion, and economic g ow h in
China, using qua e ly equency da a om 30
Chinese p o inces om 1996 o 2015. Thei
indings indica ed ha inancial de elopmen
in e ms o M2, c edi , and in en o y u no e
migh d ama ically cu ene gy use. Mo e
ecen ly, Canh e al. (2020) examined he
///. Ngui o Joel Salomon, E oa E oa Jean Bosco
/// 78 Economic Re iew: Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024
ela ionship be ween inancial de elopmen
and he ene gy in ensi y o consump ion and
p oduc ion in 81 economies om 1997 o
2013. Thei s udies demons a ed ha o e
ime, inancial ins i u ions had a g ea e impac
on ene gy in ensi y han inancial ma ke s.
Fu he mo e, in he e en o an oil shock,
na ions wi h highe le els o inancial
de elopmen see a dec ease in he ene gy
in ensi y o hei ou pu , whe eas hose wi h
s onge inancial ins i u ions see a dec ease in
he ene gy in ensi y o hei consump ion.
F om 1984 o 2015, Chiu and Lee (2020)
in es iga ed he ela ionship be ween ene gy
consump ion, inancial de elopmen , and
coun y isk in 79 na ions and wo subg oups.
Thei indings e ealed ha unde a s able
coun y- isk con ex , inancial de elopmen
leads o less ene gy usage. Benk aiem e al.
(2019) claimed ha posi i e and nega i e
shocks o inancial de elopmen a ec ene gy
usage in opposi e di ec ions.
Aside om he esea ch ci ed abo e, which
examines he ela ionship be ween inancial
de elopmen and adi ional ene gy
consump ion, jus a ew publica ions add ess
enewable ene gy consump ion. Wu and
B oads ock (2015) e alua ed da a om 22
eme ging na ions be ween 1990 and 2010, and
disco e ed ha inancial de elopmen and
ins i u ional quali y ha e a a o able and
signi ican impac on enewable ene gy use.
Bes (2017) used da a om up o 137 na ions
om 1998 o 2013 o s udy he ole o inancial
capi al in he g ow h o ene gy use. He
disco e ed ha inancial capi al acili a es he
shi o mo e capi al-in ensi e ene gy sou ces.
Fo high-income coun ies, inancial capi al
se es as a s imulus o he shi om ossil
uels o mode n enewable ene gy sou ces,
pa icula ly wind powe . Ku an e al. (2017)
examined da a om B azil, China, India, and
Sou h A ica om 1990 o 2012 and ound ha
FDI lows and s ock ma ke de elopmen ha e
a signi ican impac on enewable ene gy use.
Simila ly, Bu ako and F eidin (2017)
examined he causal ela ionship be ween
inancial de elopmen , economic g ow h, and
enewable ene gy usage in Russia om 1990 o
2014. Thei indings indica ed ha he e was
no causal ela ionship be ween inancial
de elopmen and enewable ene gy
consump ion.
Ji and Zhang (2019) demons a ed, using a ime
se ies analysis o Chinese s ock ma ke da a
om 1992 o 2013, ha inancial de elopmen
is c i ical and accoun s o mo e han 40% o
he a ia ion in he e olu ion o enewable
ene gy sha e. An on and Nucu (2020)
conduc ed empi ical esea ch based on a ixed-
e ec s panel model using panel da a om 28
EU na ions be ween 1990 and 2015 o
in es iga e he e ec o inancial de elopmen
on enewable ene gy usage. The esul s hey
ob ained show ha a ious componen s o
inancial de elopmen (banking sec o , bond
ma ke , and capi al ma ke ) aise he
p opo ion o enewable ene gy use. They also
s a ed ha he expansion o he capi al ma ke
had li le impac on enewable ene gy use in
he new EU membe s a es.
Ou pape di e s om o he s in he li e a u e
in wo ways. Fi s , i is he i s o in es iga e
he ole o inancial de elopmen in
de e mining enewable ene gy consump ion
while accoun ing o he a io o comme cial
banks pe adul and economic de elopmen as
addi ional ac o s. Second, a ailable li e a u e
indica es a g owing in e es in inc easing
enewable ene gy use. Clea e idence o he
ole o inancial de elopmen has been ound,
bu only in a selec g oup o coun ies. While
hese c oss-na ional s udies p o ide impo an
in o ma ion on he impac o inancial
de elopmen on enewable ene gy usage, hey
do no add ess Came oon's speci ic condi ions.
As a esul , his a icle is one o he i s o
quan i y he in luence o inancial de elopmen
on Came oon's enewable ene gy usage. The
empi ical indings may assis policymake s in
aking s eps o p omo e enewable ene gy
consump ion and c ea e an economically
e icien and en i onmen ally sus ainable
ene gy sys em.
Gi en ha enewable ene gies a e mo e
expensi e han adi ional ene gy sou ces
(An on and Nucu 2020), hey equi e a g ea e
access o inancial esou ces (deb and/o
equi y). In o he wo ds, he g ow h o he
inancial indus y can spu in es men in clean
and enewable ene gy. A posi i e ela ionship
be ween inancial de elopmen and enewable
ene gy consump ion is expec ed. Based on
ecen li e a u e, he ollowing hypo hesis is
es ed: The e is a posi i e ela ionship be ween
The e ec o inancial de elopmen on enewable ene gy consump ion in Came oon //
Economic Re iew – Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024 79 ///
inancial de elopmen and enewable ene gy
consump ion in Came oon.
Ou equa ion model will ep esen a gene al
speci ica ion, aimed a examining he ole o
inancial de elopmen indica o s on enewable
ene gy consump ion in Came oon o e a
pe iod om 2000 o 2022, whe e enewable
ene gy consump ion is ea ed as a dependen
a iable while banking, s ock and bond
indica o s, FDI, he consume p ice index and
GDP pe capi a a e ea ed as explana o y
a iables. We will he e o e use ime se ies
econome ics.
3. Me hodology
3.1 Da a sou ce and choice o a iables
The da a used in his a icle a e based on he
annual ime se ies da a o Came oon o e he
pe iod 2000 o 2022. The pe iod was chosen
on he basis o he a ailabili y o all he da a
se ies. The sou ce o he da a is he Wo ld
Bank's Wo ld De elopmen Indica o s (WDI).
The dependen a iable is enewable ene gy
consump ion (REN), measu ed as he sha e o
enewable ene gy in o al inal ene gy
consump ion. In line wi h p e ious wo k,
Chang (2015); Coban and Topcu, (2013),
Regean and Bulime, (2024), inancial p og ess
is possibly quan i ied by he ac o s below:
• Fo eign di ec in es men (FDI) is
measu ed as ne in lows as a
p opo ion o GDP.
• Domes ic c edi g an ed by he
inancial sec o (CIF) (% o GDP): as an
indica o o he de elopmen o he
banking sec o .
• Ou s anding in e na ional p i a e deb
secu i ies (ETDPI) in ela ion o GDP
(%), as an indica o o he de elopmen
o he bond ma ke .
• The Consume P ice Index (CPI) is used
as an indica o o ene gy p ices, as da a
on ene gy p ices is no eadily a ailable
ollowing p e ious s udies.
• The a io o comme cial banks pe
adul (BCA): Rep esen s he numbe o
comme cial banks likely o g an c edi
pe 100,000 adul s, and measu es he
accessibili y o bank c edi o adul s.
• The economic de elopmen (ED):
measu ed by GDP pe capi a based on
pu chasing powe pa i y (PPP)
(cons an 2011 in e na ional).
• GDP g ow h (CPIB), (annual %):
ep esen s income, and is measu ed by
he annual pe cen age g ow h a e o
GDP pe capi a based on a cons an
local cu ency.
Table 1. Desc ip ion o a iables
Names
Abb e ia ions
Sou ce
Renewable ene gy consump ion
REN
WDI (Wo ld De elopmen
Indica o s), Wo ld Bank 2022
Fo eign di ec In es men
FDI
Domes ic c edi g an ed by he inancial
sec o
CIF
Ou s anding in e na ional p i a e deb
secu i ies
ETDPI
Consume P ice index
CPI
Comme cial bank a io pe adul
BCA
Economic de elopmen
ED
GDP g ow h (annual %)
CPIB
Sou ce: au ho , aken om WDI
///. Ngui o Joel Salomon, E oa E oa Jean Bosco
/// 80 Economic Re iew: Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024
3.2 Model speci ica ion
Following he mos ele an p e ious s udies
(Chang 2015; Regean and Bulime, 2024), ou
model is w i en as:
REN = a0 + a1 FDI + a2 CIF + a3 ETDPI + a4
CPI + a5 BCA + a6 ED + a7 CPIB + µ ,
whe e he ime pe iod is deno ed by he index
( =1, ..........T); a1 ,....,a7; a0 and µ ep esen he
cons an and he e o e m espec i ely.
The eg ession coe icien s a e es ima ed by
he eg ession analysis. They show ha ,
assuming ha he o he a iables emain ixed,
an inc ease o one uni in an explana o y
a iable inc ease (o dec eases) he enewable
ene gy consump ion o uni s "a". Be o e
es ima ing he long- e m ela ionship, he non-
s a iona i y o he a iables mus be es ed.
The Augmen ed Dickey Fulle (ADF) es
de eloped by Dickey and Fulle (1981) and he
Phillips Pe on (PP) es a e used o his
exe cise. A e indica ing he in eg a ion o he
a iables in he same o de , in he nex s age
he a iables will be es ed o a long- e m
coin eg a ion ela ionship. The Johansen es s
will be used o es he coin eg a ing
ela ionship.
4. Resul s
4.1 Desc ip i e s a is ics and S a iona i y es
We can see ha he se ies analyzed show
signi ican a ia ions o e ime, and he
s anda d de ia ion o all he a iables is high
(Table 2). We would check o see i ou
di e en a iables a e s a iona y, as hey a e
usually s a iona y a he le el (G eene, 2002). I
hey con ain ends and hence a e non-
s a iona y, we mus make hem s a iona y o
a oid he possibili y o eg essions ac oss
a iables. This es will be pe o med using
S a a 17 wi h he ADF (Augmen ed Dickey-
Fulle ) and PP (Phippips Pe on) es s. F om
he Table 3, we can see ha none o ou
a iables is s a iona y a le el acco ding o he
ADF and PP es s. On he o he hand, o hese
same es s, all ou a iables become s a iona y
in i s di e ence.
4.2. Op imal delay and coin eg a ion
To ind he lag numbe (p) o ou VAR model,
we will use he Akaike (AIC) and SBIC c i e ia.
Table 4 epo s he esul s ob ained. The
op imal delay, i.e. he one ha minimizes he
AIC and SBIC c i e ia, is p=1, so ou model is a
VAR (1). To analyze he long- e m ela ionship
be ween ou a iables, we will use Johansen's
coin eg a ion es , wi h he ollowing
hypo heses:
H0: no coin eg a ion;
H1: coin eg a ion
The esul s o he coin eg a ion es a e shown
in Table 5.
Acco ding o Table 5, we accep he hypo hesis
H0, i.e. ha he e is no coin eg a ing
ela ionship a he 5% h eshold, as he ace
s a is ic is below he c i ical alue (11.9671 ˂
15.41). The mos sui able model o his
analysis is he e o e he VAR (Vec o
Au o eg essi e) model. The VAR echnique is
app op ia e in his case because o i s abili y o
cha ac e ize he dynamic s uc u e o he
model as well as i s abili y o a oid imposing
excessi e iden i ica ion es ic ions associa ed
wi h di e en economic heo ies. The use o
VAR in mac oeconomics has gene a ed a
weal h o empi ical e idence, p o iding
undamen al suppo o many economic
heo ies (Blancha d and Wa son, 1984,
Be nanke, 1986 among o he s). The VAR model
is adop ed o his s udy because o i s
p edic i e powe ela i e o la ge s uc u al
models. Again, one o he common i ues o
he VAR model is ha i a oids ha ing o decide
which con empo aneous a iables a e
exogenous, all a iables being endogenous.
4.3 VAR model esul s (1)
The esul s o he es ima ion o he pa ame e s
o ou VAR model (1) a e summa ized in Table
6. The eg ession esul s appea o be ai ly
sa is ac o y. The log likelihood is ai ly high
(Log likelihood = -1068.406), which means ha
ou model i s well. The p obabili y o he F-
s a is ic (0.0000) is less han 5%, which shows
ha he model is signi ican o e all. The
selec ed a iables signi ican ly explain
enewable ene gy consump ion in Came oon.
4.4. Model alidi y es s
The e ec o inancial de elopmen on enewable ene gy consump ion in Came oon //
Economic Re iew – Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024 87 ///
Table 5. Resul s o he coin eg a ion es
Johansen es o coin eg a ion
Rank
T end : Cons an
Numbe o obs : 22
Sample : 2001 h u 2022
Numbe o lags : 1
T ace s a is ic
C i ical alue 5%
0
32.2375
29.68
1
11.9671*
15.41
2
1.3955
3.76
*selec ed ank
Sou ce: au ho , based on STATA 17
Table 6. VAR model eg ession esul s (1)
No e: ***, ** and * ep esen signi icance a 1%, 5% and 10% espec i ely Figu es in b acke s a e s anda d de ia ions.
Sou ce: Au ho , based on STATA 17
Table 7. Resul s o no mali y es o esiduals
Va iables
Coe
T-S a
REN (1)
FDI
L1.
-1.99**
(8.63)
0.021
CIF
L1.
1.119**
(0.561)
0.046
ETDPI
L1.
-2.489***
(0.670)
0.000
CPI
L1.
-5.493***
(1.181)
0.000
BCA
L1.
14.243*
(7.725)
0.065
ED
L1.
3.02***
(7.90)
0.000
CPIB
L1.
2.974**
(1.551)
0.055
Cons
385.402
(81.923)
0.000
Sample: 2001 h u 2022
Log likelihood = -1068.406
FPE = 2.20e+35
De (Sigma_ml) = 2.10e+32
P>chi2 = 0.0000
Numbe o obs = 22
AIC = 103.6733
HQIC = 104.5144
SBIC = 107.244
///. Ngui o Joel Salomon, E oa E oa Jean Bosco
/// 88 Economic Re iew: Jou nal o Economics and Business, Vol. XXII, Issue 1, May 2024
Sou ce: au ho , based on STATA 17
Table 8. Au oco ela ion es esul s o esiduals
Sou ce: au ho , based on STATA 17
Figu e 1. B eusch-Pagan es esul
Sou ce: au ho , based on STATA 17
Equa ion
Chi2
D
P ob > chi2
REN
1.922
2
0.78258
FDI
1.309
2
0.51959
CFI
1.296
2
0.88318
ETDPI
0.046
2
0.97717
CPI
0.441
2
0.80224
BCA
1.278
2
0.52783
ED
0.017
2
0.99139
CPIB
0.300
2
0.86065
ALL
22.609
16
0.12459
Lag
Chi2
d
P ob˃chi2
1
34.0907
25
0.10598
2
60.4348
25
0.28799
