Financial Development and Energy Consumption: Empirical Evidence from Pakistan

Kakar, Zaheer Khan; Khilji, Bashir Ahmad; Khan, Muhammad Jawad

doi:10.7763/ijtef.2011.v2.150

Cited by 56 publications

(36 citation statements)

References 5 publications

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“…When financial development stems from banking sector or stock market, greater financial development leads to an increase in energy consumption. This finding is consistent with the bulk of the financial development-energy literature (see, for example, Islam et al, 2013;Kakar et al, 2011;Ozturk and Acaravcı, 2012;Sadorsky, 2010Sadorsky, , 2011Xu, 2012).…”

Section: Conclusion and Policy Implicationssupporting

confidence: 87%

The impact of CO2 emissions and economic growth on energy consumption in 58 countries

2015

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a b s t r a c tThis paper attempts to investigate the impact of economic growth and CO 2 emissions on energy consumption for a global panel of 58 countries using dynamic panel data model estimated by means of the Generalized Method of Moments (GMM) for the period 1990-2012. We also estimate this relationship for three regional panels; namely, from Europe and North Asia, Latin America and Caribbean, and SubSaharan, North African and Middle Eastern. The empirical evidence indicates significant positive impact of CO 2 emissions on energy consumption for four global panels. Economic growth has a positive impact on energy consumption and statistically significant only for the four panel.

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Section: Conclusion and Policy Implicationssupporting

confidence: 87%

The impact of CO2 emissions and economic growth on energy consumption in 58 countries

2015

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“…For Pakistan, Kakar et al (2011) showed that financial development affects energy consumption in the long term but not in the short term. For nine Central and Eastern European frontier economies, Sadorsky (2011) showed a positive and significant relationship between financial development and energy consumption when financial development is measured by banking variables, such as bank deposits to GDP, financial system deposits to GDP, and liquid liabilities to GDP.…”

Section: Financial Development and Energy Consumption In Other Countriesmentioning

confidence: 99%

Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis

et al. 2017

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This paper investigates the asymmetric relationship between energy consumption and economic growth by incorporating financial development, capital and labour into a production function covering the Indian economy from 1960Q 1 -2015Q 4 . The nonlinear autoregressive distributed lag bounds testing approach is applied to examine the asymmetric cointegration between the variables. An asymmetric causality test is also employed to examine the causal association between the considered variables. The results indicate cointegration between the variables in the presence of asymmetries. The asymmetric causality results show that only negative shocks in energy consumption have impacts on economic growth. In the same vein, only negative shocks in financial development have impacts on economic growth. By contrast, symmetrically, capital formation causes economic growth. Finally, over the study period, a neutral effect exists between the labour force and economic growth in India. The implications of these results for growth policies in India are also discussed.Keywords: Financial Development, Energy, Growth, India, Asymmetries JEL classification: O13 Acknowledgements: We would like to thank the editor, Professor Richard Tol (University of Sussex, Brighton, UK), as well as the three anonymous reviewers, for their valuable comments and suggestions that helped us improve our paper significantly. We also thank the participants at the 7 th International Research Meeting in Business and Management (IPAG, Nice, France, 11-12 July 2016). We are also grateful to Jawad Kazmi for his technical assistance. The authors' are responsible for any remaining errors or shortcomings. IntroductionThis study uses quarterly data to investigate the relationship between energy consumption and economic growth in India over the 1960-2015 period. Financial development (measured by domestic credit to the private sector), 1 capital formation and labour force 2 are also included in the Cobb-Douglas production function. This study's main contribution to the existing literature on the energy-growth nexus concerns its examination of the potential asymmetric relationship between the variables. Taking this asymmetry into account is important because a positive or negative variation on one variable does not have the same impact on the other variable. The existence of an asymmetric relationship between two variables can be caused by numerous factors, one of which concerns the complexity of economic systems and the mechanisms that generate the variables under study. This complexity may induce various channels through which one variable affects another. In our case, the relationship between energy consumption and economic growth has been found to be very complex because previous studies have shown four possible impact channels: the growth, conservative, feedback and neutrality hypotheses. 3 On the one hand, the relationship between energy consumption and financial development can also be very complex because numerous impact channels can exist between them...

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“…The existence of a long-run relationship was conditioned by the measure of financial development. Kaker, Khilji, and Khan (2011) applied a production function to examine the relationship between economic growth, financial development and energy consumption using Pakistani data. They concluded that the neutrality hypothesis between financial development and economic growth exists but energy consumption Granger causes financial development.…”

Section: Financial Development and Electricity Consumptionmentioning

confidence: 99%

Economic growth, financial development, urbanisation and electricity consumption nexus in UAE

Sbia

Shahbaz

Öztürk

2017

Economic Research-Ekonomska Istraživanja

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This study aims to explore the relationship between economic growth, urbanisation, financial development and electricity consumption in United Arab Emirates for the period 1975-2011. The ARDL bounds testing approach is employed to examine the long-run relationship between the variables in the presence of structural breaks. The VECM Granger causality is applied to investigate the direction of causal relationships between the variables. Our empirical exercise validated the cointegration between the series in the case of United Arab Emirates. Further, results reveal that an inverted U-shaped relationship is found between economic growth and electricity consumption. Financial development adds in electricity consumption. The relationship between urbanisation and electricity consumption is also an inverted U-shaped. This implies that urbanisation increases electricity consumption initially and, after a threshold level of urbanisation, electricity demand falls. The causality analysis finds feedback hypothesis between economic growth and electricity consumption, i.e. economic growth and electricity consumption are interdependent. The bidirectional causality is found between financial development and electricity consumption. Economic growth and urbanisation Granger cause each other. The feedback hypothesis is also found between urbanisation and financial development, financial development and economic growth, and the same is true for electricity consumption and urbanisation.

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Financial Development and Energy Consumption: Empirical Evidence from Pakistan

Cited by 56 publications

References 5 publications

The impact of CO2 emissions and economic growth on energy consumption in 58 countries

The impact of CO2 emissions and economic growth on energy consumption in 58 countries

Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis

Economic growth, financial development, urbanisation and electricity consumption nexus in UAE

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