THE IMPACT OF FINANCIAL DEVELOPMENT ON RENEWABLE ENENRGY CONSUMPTION IN MAURITIUS

This study examined the asymmetric impact of financial sector development on renewable energy in Mauritius, employing data from 1990 to 2022. The study was motivated by the growing call for countries to reduce their carbon footprint, which has been spearheaded by the United Nations. The study, therefore, aims to examine whether financial development in Mauritius plays a significant role in its renewable energy drive. The study used a financial institution index developed by the IMF to examine the link between the two variables. Using the NARLD (non-linear autoregressive distributed lag) model, the study found positive shocks on financial development to be positively associated with renewable energy consumption in Mauritius. However, negative shocks on financial development were found to have no impact on energy consumption from renewable sources, both in the short run and in the long run. The study, therefore, recommends that Mauritius continue to expand its financial sector to increase its renewable energy consumption and transform its renewable energy mix, as highlighted in its Renewable Energy Roadmap 2030.