Energy efficiency investment in a developing economy: financial development and debt status implication
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 9 February 2024
Abstract
Purpose
This study aims to assess financial development and debt status impact on energy efficiency in Nigeria as a developing economy.
Design/methodology/approach
This study combined the autoregressive distributed lag (ARDL), fully modified ordinary least squares and canonical cointegration regression analytical methods to estimate the parameters for energy efficiency policy recommendations. Secondary data between 1990 and 2020 were used for the analysis.
Findings
The result confirms the long-run nexus between energy efficiency, financial development and total debt stock. Furthermore, the ARDL estimates for this study’s key variables show that financial development promotes energy efficiency in the short run but hinders long-run energy efficiency. Total debt stock limits energy efficiency in Nigeria in short- and long-run periods.
Research limitations/implications
The limitation of this study is that the scope is limited to Nigeria as a developing economy. The need to support energy efficiency projects is a global call requiring cross-country analysis. Despite this study’s focus on Nigeria, it provides useful insights that can guide energy efficiency policy through the financial sector and debt management.
Practical implications
The financial sector must ensure the availability of long-term credit facilities to clean energy investors. The government must maintain a sustainable debt profile to pave the way for capital expenditure on clean energy projects that promote energy efficiency.
Originality/value
The environmental consequences of energy intensity are being felt globally, with the developing countries most vulnerable. The cheapest way to curb these consequences is to promote energy efficiency to reduce the disastrous effect. Driving energy efficiency requires investment in energy-efficient technology but the challenge for developing economies, i.e. Nigeria’s funding, remains challenging amid a blotted debt profile. This becomes crucial to investigate how financial sector development and debt management can accelerate energy-efficient investments in Nigeria.
Keywords
Acknowledgements
Conflict of interest: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Availability of data and materials: The data sets used and/or analysed during the current study are available in the World Bank Development Indicator (WDI) repository, https://wdi.worldbank.org and Central Bnk of Nigeria (CBN) Statistical Bulletin, repository: www.cbn.gov.ng/documents/statbulletin.asp.
Authors contributions: Chukwunonso Ekesiobi, Conceptualisation, Original Draft – Reviewing and Editing, Writing and Reviewing, Validation. Stephen Obinozie Ogwu, Conceptualisation, Original Draft – Reviewing and Editing, Writing and Reviewing, Validation. Joshua Chukwuma Onwe, Conceptualisation, Data Collection and Analysis, Original Draft – Reviewing and Editing. Ogonna Ifebi, Conceptualisation, Original Draft – Reviewing and Editing, Writing and Reviewing, Validation. Precious Muhammed Emmanuel, Conceptualisation, Data Collection and Analysis, Original Draft – Reviewing and Editing, Writing and Reviewing, Validation. Kingsley Nze Ashibogwu, Reviewing and Editing, Writing and Reviewing, Validation.
Citation
Ekesiobi, C., Ogwu, S.O., Onwe, J.C., Ifebi, O., Emmanuel, P.M. and Ashibogwu, K.N. (2024), "Energy efficiency investment in a developing economy: financial development and debt status implication", International Journal of Energy Sector Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJESM-12-2023-0002
Publisher
:Emerald Publishing Limited
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