Introducing a New Broad-Based Index of Financial Development

Financial development and renewable energy consumption in Nigeria

“…Hence, we adopt a similar model used by Anton and Nucu (2019) 1 to estimate the effect of financial development on renewable energy consumption in 28 EU countries. Our model, however, deviates from Anton and Nucu (2019) by using the broad-based financial development measure developed by Svirydzenka (2016) which compresses the various elements of financial development into an index that comprises both financial markets and financial institutions in three distinctive themes (access: companies and individuals capacities to obtain financial services; depth: markets size and liquidity; and efficiency: the ability of institutions to offer financial services at a lower rate and with sustainable revenues) (Svirydzenka, 2016;Iorember et al, 2020). Underpinning the foregoing, we hypothesize that renewable energy consumption (RENC) is a function of the financial development index (FIDI), growth rate of per capita GDP (GDPC), consumer price index (CPI), and foreign direct investment (FDI) resulting in the following equation:…”

“…We use the financial development index (FIDI) following the Svirydzenka (2016) broad-based financial development measure that covers some elements of financial institutions, and financial markets in three distinct categories (access, depth, and efficiency). In computing the FIDI, we first standardized the data relating to the aforementioned sub-indices of financial institutions and financial markets to obtain values within the range of 0 and 1, using the min-max procedure which helped us to aggregate variables that are originally expressed in diverse units of measurements (Svirydzenka, 2016). Thereafter, we obtain the mean values of the 20 standardized indices of both financial institutions and financial markets to serve as the FIDI variable.…”

“…The values of Xs range from 0 to 1 and show a country's performance when compared to the global minimum and maximum across all countries and years, with 0 indicating worst performance and 1 indicating best performance (Svirydzenka, 2016). However, for some indices (e.g.…”

“…Secondly, related studies have utilized one or two variables to measure financial development (Lin et al 2016;Hassine and Harrathi, 2017;Kutan et al 2017;Ankrah and Lin, 2020;Khan et al, 2020;Razmi et al, 2020) which are inadequate to capture the multifaceted make-up of financial development. Hence, this study utilizes a novel and comprehensive financial development measure (financial development index) developed by Svirydzenka (2016) and captured using three distinctive themes (access, depth, and efficiency) Third, Omojolaibi (2016) and Iorember et al (2020) represent the nearest works from existing literature similar to this study on Nigeria. This work improves upon these studies by establishing a direct interaction between financial development and renewable energy use.…”

The Market Impact of New Auditing Standards in China

“…Our finding of a market response to KAMs may indicate that they are more informative in less developed financial markets. The U.K. and France have higher Financial Development Index values than Brazil and China (Svirydzenka, 2016). The enhanced audit reports provide a larger relative increase in investors' information in environments with less financial development than in more financially developed environments.…”