Financial Development, Economic Growth and Energy Consumption Nexusin Cote d’Ivoire

Diby Francois Kassi, Alireza Nasiri and A.Jean Roland Edjoukou
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Alireza Nasiri: Management school,Universityof Tehran, Tehran, Iran
A.Jean Roland Edjoukou: School of Accounting, Dongbei University of Finance and Economics,Dalian, China

International Journal of Finance & Banking Studies, 2017, vol. 6, issue 3, 01-21

Abstract: This paper examines the relationship between financial development, economic growth and energy consumption in Cote d’Ivoire overthe period 1971-2011. To do so, the study first built a synthetic indicator of financial development through the Principal Component Analysis technique (PCA) and used four energy sources such as electric power consumption, electricity production from renewable sources, electricity production from oil sources and electricity production from hydroelectric sources. Then, employing the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration, we find that there is a long run relationship between financial development, economic growth and energy consumption sources. Furthermore, the results of the Vector Error Correction Models (VECM) reveal unidirectional causality running from financial development to energy consumption sources, bidirectional causality between economic growth and energy consumption and unidirectional causality from financial development to economic growth in the long run. The mixed results are due to the use of different proxies for energy consumption. Accordingly, this paper recommends that policy makers should solicit the support of financial sector in order to solve energy problems and further the diversification of the energy consumption sources since financial development has a positive effect on energy consumption in long run. Moreover, government should develop public-private partnership (PPP) to stimulate economic growth, as well as to improve the access to energy and maintain a sustainable development in Cote d’Ivoire.

Keywords: Financial Development; Economic Growth; Energy Consumption; ARDL; Cote d’Ivoire (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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