The Relationship Between Renewable Energy Consumption and Stock Market Capitalisation and Carbon Emissions: Insights from G20 Countries

Abstract

The research question of whether carbon emissions affect the economic growth and financial development of countries is discussed in the literature. Based on this, this study examines the relationship between carbon emissions (CO2) market capitalisation and renewable energy consumption, which are financial development indicators. The model established with the carbon emissions, renewable energy consumption, market value, fixed capital investments and gross domestic product indicators of the G20 countries between 1992 and 2018 was tested with panel data cointegration analysis and panel causality analysis. As a result of the empirical analysis, it has been found that there is a statistically significant and negative relationship between renewable energy consumption, market capitalisation and carbon emissions, and there is a bidirectional causality relationship between market capitalisation and carbon emissions. The results are that the effective use of energy and the developments in the financial system will contribute to sustainable development policies.