Trade, Solar Energy, and Energy Poverty: The Mediating Role of Green Financial Behavior and the Moderating Effect of the Digital Divide

Abstract

A significant threat to sustainable development is energy poverty, which is observed mainly in places where clean fuels and electricity are not accessible. The current paper examines the predictors of energy poverty especially focusing on the contribution of trade openness, economic growth, population dynamics, and solar energy consumption, and the mediating role of green financial behavior (GFB) and the moderating role of the digital divide (DGD). It uses the dynamic System GMM approach using panel data on 152 countries over the period 2000 to 2023 to address the endogeneity and persistence of energy poverty. The results indicate that openness to trade and economic growth have a substantial influence in reduction of energy poverty, whereas population growth enhances energy poverty. The utilization of solar energy and GFB turns the most important factors in alleviating energy poverty and the GFB mediates the effects of economic, demographic, and energy factors. Notably, there is a moderating effect of the digital divide on this broader relationship whereby the influence of GFB on energy poverty is enhanced in the areas with greater digital access. Educational attainment is also identified to play an important role in alleviating energy poverty, whereas urbanization and inflation have minimal direct impact. These results highlight the need to have combined policies that will enhance the implementation of renewable energy and green financial practice at the same time, the application of digital inclusions so as to realize sustainable and fair access to energy. The article is a contribution to the literature in the sense that it brings together Behavioral Finance Theory and Sustainable Development Theory, providing practical recommendations to policy makers, financial institutions, and development agencies to minimize energy poverty in the world.

Keywords: Energy poverty, Solar energy, Green financial behavior, Digital divide, System GMM, Sustainable development