Does Bank Credit Accelerate the Energy Transition—or Reinforce Fossil-Fuel Dependence? Institutional Quality as the Discriminating Condition

Preprint and replication package. An unbalanced annual panel of 103 countries over 1995-2023 is used to ask whether bank credit accelerates the energy transition or reinforces fossil-fuel dependence, and whether institutional quality discriminates between the two. Fixed-effects interaction models, two-step system GMM, Hansen panel threshold and quantile regressions are estimated, with Driscoll-Kraay and two-way clustered standard errors alongside country-clustered ones. Bank credit to the private sector is associated with significantly higher CO2 emissions per capita and with a lower renewable-energy share, but institutional quality dampens both. A ten-percentage-point increase in credit depth raises CO2 per capita by about 3.9 percent at an institutional-quality index of zero, 6.3 percent at -1 and 1.5 percent at +1; the corresponding standardised effects are 17.8, 29.9 and 6.9 percent. A Hansen threshold of 0.68 divides the sample: below it a ten-percentage-point rise in credit is associated with a 2.5 percent increase in CO2 per capita, above it with 0.7 percent. The fossil-reinforcing effect is robust to alternative institutional and financial measures, the exclusion of pandemic years and quantile estimation, although the system GMM estimates are imprecise and the transition-accelerating effect weaker. The deposit contains the anonymised manuscript (the journal uses double-anonymised peer review), the harmonised panel and estimation panel, the 29 raw indicator extracts retrieved from the World Bank World Development Indicators API in October 2026, the six article figures and the graphical abstract, and the Python scripts that reproduce the package end to end. Note on licensing: the code is MIT-licensed; the data and figures are CC BY 4.0. The underlying World Development Indicators and Worldwide Governance Indicators series remain subject to their publishers' terms.