Bank-Based Financial Depth and Credit-Price Transmission: Cross-Country Evidence on Bank Asset Quality and Renewable-Energy Transition

This study examines how real interest-rate conditions and bank-based financial depth are associated with bank asset quality and renewable-energy share in a longitudinal cross-country panel. The empirical design combines country and year fixed effects with country-clustered standard errors, model-specific attrition diagnostics, common-sample comparisons, and sensitivity estimators. The findings provide limited evidence that higher real rates coincide with weaker bank asset quality, no support for an association between bank depth and non-performing loans, mixed evidence of a negative real-rate association with renewable-energy share, and cautious evidence of a negative bank-depth association. The formal moderation hypothesis linking real rates, lagged non-performing loans, and renewable energy is unsupported. A supplementary matched-sample analysis instead indicates that higher lending risk premia are more adversely associated with renewable-energy share when lagged non-performing loans are elevated, although this pattern weakens under first differences and more aggressive outlier treatment. The evidence is therefore associational and mechanism-specific: asset-quality stress appears to condition credit-risk pricing rather than broad real-rate transmission. This study contributes by separating macro-rate transmission from a narrower credit-risk-pricing channel and by demonstrating the importance of inference, timing, sample comparability, and financing-system structure.