Financial Development, Financial Inclusion and Primary Energy Use: Evidence from the European Union Transition Economies

Abstract

The main objective of the research is to analyze the impact of financial sector development indicators and financial institutions access on primary energy use based on a sample of European Union transition members over 20 years period (1996–2017) through panel cointegration and causality tests that allow for cross-section dependence. The causality analysis revealed that the direction of the causality among financial development indicators, financial institutions access, and primary energy use varied among the countries. On the other side, panel cointegration coefficients disclosed that the financial development index positively affected the primary energy use, but private credit did not have a significant effect on the primary energy use. Furthermore, financial institutions’ access had a significant negative impact on primary energy use. However, country-level cointegration coefficients indicated that the financial development index positively affected the primary energy use in Bulgaria, Croatia, Czechia, Hungary, and Slovenia, and private credit also had a positive impact on primary energy use in Bulgaria, Czechia, Estonia, Hungary, Lithuania, Poland, and Slovakia, but the effect of financial development index on primary energy use was found to be very higher than that of private credit. Moreover, financial institutions’ access negatively affected the primary energy use in Croatia, Estonia, Hungary, Poland, and Romania.

Determinants of shadow economy in OIC and non-OIC countries: the role of financial development

“…Table 5 (column 3) shows that financial development as represented by domestic credit (LDC) mitigates shadow economy in OIC countries and non-OIC countries. This is in line with previous studies (Bayar and Ozturk, 2016;Berdiev and Saunoris, 2016), who found that an increase in financial development significantly reduces shadow economy. Market participants would move to shadow economy if they face obstacles to raise funds in the capital market (Kaufmann and Kaliberda, 1996).…”

Impact of Green financing, FinTech, and financial inclusion on energy efficiency

“…Furthermore, they have argued regarding absence of policy synergies between growing financial inclusion and mitigating emissions. Bayar et al ( 2021 ) have asserted that financial development has the positive influence on energy usage by augmenting economic growth. Access to financial institutions can also have a beneficial effect on energy consumption by facilitating access to credit for individuals and businesses, which will promote investments and upsurge demand for energy-oriented goods (Ma and Fu 2020 ).…”

“…Access to financial institutions can also have a beneficial effect on energy consumption by facilitating access to credit for individuals and businesses, which will promote investments and upsurge demand for energy-oriented goods (Ma and Fu 2020 ). Nonetheless, financial inclusion makes economic units to have more energy efficient investments and commodities (Bayar et al 2021 ).…”

Financial inclusion and sustainable development: an empirical association

“…Some studies examine financial inclusion along several dimensions of development. For instance, Bayar et al (2021) analyze how the usage of primary energy is affected by financial sector development and access to finance. They analyze a sample of European Union (EU) transition countries from 1996 to 2017 using panel co-integration and causality tests that allow for cross-section dependence.…”

“…Some studies examine financial inclusion along several dimensions of development. For instance, Bayar et al. (2021) analyze how the usage of primary energy is affected by financial sector development and access to finance.…”