Do Institutional Quality, Financial Development, and Economic Growth Improve Renewable Energy Transition? Some Evidence from Tunisia

This work explores the relationship between institutional quality, financial development, economic growth, and renewable energy consumption in Tunisia. Accordingly, we adopt the symmetric and asymmetric autoregressive distributed lags (ARDL) using data covering the period 1984–2017. The main results indicate that when we use nonlinear approaches, we find a negative and significant impact of the financial development in renewable energy consumption, suggesting the need to apply sustainable financial mechanisms. However, renewable energy consumption seems to be stimulated by both economic growth and institutional quality. Furthermore, the nonlinear Granger causality test reveals a bidirectional causality link between renewable energy and both economic growth and institutional quality. Besides, there is evidence of a unidirectional causality relationship between financial development and renewable energy. Our results also reveal new perspectives on renewable energy deployment in Tunisia, which seems to be an effective means to avoid energy poverty and climate change challenges.