This paper investigates the moderating role of governance quality on the finance-renewable energy-growth nexus in five major regions in the world, including 123 countries from 1990 to 2017. In a disaggregated approach, we used several financial variables denoting financial depth, financial efficiency, financial inclusion, and financial stability, which represent the different components of financial development. In an aggregated approach, we constructed composite indexes of governance quality and financial development following the principal component analysis (PCA). Next, we applied the two-stage least squares, difference-GMM, and system-GMM methods, as well as the Granger non-causality test in (Dumitrescu and Hurlin Econ Model 29(4):1450-1460, 2012). First, the results show that financial development and improved governance quality are complementary drivers of economic growth in all regions, except in America and Europe and Central Asia in most cases. Similarly, renewable energy consumption and enhanced governance quality are interrelated factors in strengthening economic growth in the Asia Pacific, MENA, and SSA regions, as opposed to the Americas and Europe and Central Asia. Second, there is bidirectional causality between financial development and economic growth in all areas, while the two-way causality between renewable energy consumption and growth is only confirmed in America and SSA regions, respectively. This study reveals the threshold effect of governance quality on the renewable energy-finance-growth nexus across regions. Therefore, policymakers should improve the level of governance quality and the efficiency of financial systems and renewable energy consumption to promote sustainable development in the different regions, especially in the Asia Pacific, MENA, and SSA zones.
Keywords: Economic growth; Financial development; Governance; Major regions; Renewable energy.