Financial Development and Renewable Energy Consumption in Nigeria

This study investigated the impact of financial development on renewable energy consumption in Nigeria over the period 1990 to 2025 using Domestic Credit to Private Sector, Broad Money Supply, Stock Market Capitalization and Bank Deposit as a proxy for financial development while renewable energy consumption serves as the dependent variable. Data were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank World Development Indicators (WDI), 2025 and were analyzed using the Augmented Dickey-Fuller unit root test, and Autoregressive Distributive Lag (ARDL). The results indicate the existence of a long-run relationship between financial development and renewable energy consumption according to the bound test. Further findings revealed that domestic credit to private sector and stock market capitalization has a significant positive impact on renewable energy consumption. However, broad money supply had a negative but significant impact on renewable energy consumption while bank deposit reported a positive but insignificant relationship with renewable energy consumption in Nigeria. Hence, it was concluded that financial development had a considerable impact on renewable energy consumption in Nigeria. It was recommended amongst others that the Central Bank of Nigeria should collaborate with the Bank of Industry to expand concessional lending and credit guarantee schemes specifically tailored to renewable energy projects, particularly for small and medium-scale enterprises engaged in solar and off-grid solutions.