The impact of financial development on energy consumption in emerging economies

Sadorsky, Perry

doi:10.1016/j.enpol.2009.12.048

Cited by 1,186 publications

(752 citation statements)

References 48 publications

Supporting

Mentioning

660

Contrasting

Unclassified

Order By: Relevance

“…Sadorsky (2010) found a positive and significant relationship between financial development and energy consumption when financial development is measured by stock market variables in 22 emerging countries, including India. Boutabba (2014) validated the long-term unidirectional causality running from financial development to energy use.…”

Section: The Nexus Between Financial Development and Energy Consumptionmentioning

confidence: 97%

“…With regard to the first channel, financial development increases energy consumption because it supports economic growth, which triggers a higher demand for energy (e.g., Sadorsky 2010, Zhang 2011, Aslan et al 2014a, Rashid and Yousaf 2015. Sadorsky (2011) explained this positive causality with three different effects: the direct effect (people buy more energy-consuming goods), the business effect (more businesses increase energy demand) and the wealth effect (higher economic confidence induces higher demand for energy).…”

Section: The Nexus Between Financial Development and Energy Consumptionmentioning

confidence: 99%

“…One channel argues that financial development causes economic growth, which in turn causes an increase in energy consumption. On the other hand, financial development can also lead to an increase in investments in new technologies, which allow for the reduction of energy consumption (Sadorsky, 2010). In this context, examining how positive and negative variations of financial development can affect energy consumption is very important.…”

mentioning

confidence: 99%

See 2 more Smart Citations

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

et al. 2017

View full text Add to dashboard Cite

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...

show abstract

Section: The Nexus Between Financial Development and Energy Consumptionmentioning

confidence: 97%

Section: The Nexus Between Financial Development and Energy Consumptionmentioning

confidence: 99%

mentioning

confidence: 99%

See 1 more Smart Citation

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

et al. 2017

View full text Add to dashboard Cite

show abstract

“…In contrast, according to Sadorsky (2010) and Zhang (2011), financial development may contribute to carbon dioxide emissions. Stock market development assists public companies in reducing financial costs, enlarging financial channels, sharing operational risks and finding a balance between assets and liabilities to acquire new installations and allocate resources for the implementation of new projects, which ultimately increases energy consumption and carbon dioxide emissions.…”

mentioning

confidence: 98%

Financial development and environmental quality: The way forward

et al. 2016

View full text Add to dashboard Cite

The present paper re-examines the asymmetric impact of financial development on environmental quality in Pakistan for the period 1985Q1 to 2014Q4. A comprehensive index of financial development is generated using Bank-and Stock market-based financial development indicators. The results show that inefficient use of energy adversely affects the environmental quality. This suggests adoption of energy efficient technology at both production and consumption levels. These technologies would be helpful to improve environmental quality, enhance the productivity in long-run and save energy. Bank-based financial development also impedes the environment. The government should encourage lenders to ease the funding for energy sector and allocate financial resources for environment friendly businesses rather than wasting them in consumer financing.

show abstract

“…Estimation of multi-dimensional relationship has also proved the role of energy in overall economic development (Tamizan, 2009) (Shahbaz, 2012). Recently, Sadorsky has proved the influence of financial development on energy consumption (Sadorsky, 2010). Very recently, ARDL bounds test was used to prove the causation of energy demand on export (shahbaz, 2013).…”

Section: Review Of Literaturementioning

confidence: 99%

Impact of Eco-Efficient Energy on Sustainable Development in South Asia: Empirical Estimations

Saldanha¹,

Premakumara

2017

SDMIMD

View full text Add to dashboard Cite

Energy is a prerequisite for all production processes and development. However, eco-efficient, sustainable green energy is essential for sustainable development and green growth. The commitments to produce renewable, clean and green energy have compelled all countries, by the International Agreements and Treaties on energy, environmental protection and sustainable growth. In this background, the present work tried to examine the efforts made by South Asian countries in order to produce eco-efficient, sustainable, clean energy and its interactions with economic development. The present study has used secondary time series data on green energy parameters and parameters related to economic development. The econometric techniques such as stationarity, impact models have been used for examination and analysis of data. It has been found from the analysis that energy intensity has been significantly increased in South Asia along with economic development. However, the production of green energy is not commensurate with its expected rate. Moreover, the shares of both renewable energy and renewable electricity in total energy have been declined over the period of time. This is a negative sign of sustainable development and green growth. Hence, there is a need to restructure the energy policy by South Asian countries according to the needs of sustainable development and green growth. Accordingly, consumption, transmission, process, etc., should be made mandatory to use green energy in their total energy consumption. Pigouvian principle of taxing on increasing social cost and subsidization for increasing social benefits is more appropriate for South Asian policies and strategies for eco efficient green energy and green growth.

show abstract

The impact of financial development on energy consumption in emerging economies

Cited by 1,186 publications

References 48 publications

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

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

Financial development and environmental quality: The way forward

Impact of Eco-Efficient Energy on Sustainable Development in South Asia: Empirical Estimations

Contact Info

Product

Resources

About