Exploring the Impacts of Electricity Consumption and Financial Development on Urbanization

Mehedi Hasan, Md. Obidul Haque, Saddam Hossain and Md. Ahsan Habib
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Mehedi Hasan: Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh
Md. Obidul Haque: Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh
Saddam Hossain: Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh
Md. Ahsan Habib: Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh

International Journal of Science and Business, 2021, vol. 5, issue 1, 82-91

Abstract: This paper proposes to make a contribution to the existing literature through examining the impacts of electricity consumption and financial development on urbanization in Bangladesh during 1974-2014 by employing modern econometric techniques. We conduct dynamic nexus among financial development, electricity consumption, and urbanization by utilizing ARDL technique. The ARDL technique is employed to find dynamics among variables and to check the long run connection. This analysis performed the unit root problem through the ADF test where variables are I(0). Long-term associations are found by checking the bound test. Both electricity consumption and financial development are significant to affect urbanization. The long-run elasticities are higher impacts on urbanization than the short-run elasticities. Also, various diagnostic tests are made such as serial correlation, heteroscedasticity, normality. To evaluate the parameter stability, we execute the CUSUM test and CUSUM square. The results confirmed that there is no structural break in the economy. The paper provides some policy recommendations based on the results.

Keywords: Financial Development; Urbanization; Bangladesh; ARDL Bound test (search for similar items in EconPapers)
Date: 2021
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