Impact of Financial Development and Economic Growth on Energy Consumption in Developing Countries of Asia

Muhammad Usman, Kiran Rasheed, Faiq Mahmood, Ahsan Riaz and Mohsin Bashir
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Muhammad Usman: Department of Management and Administration Sciences, University of Gujarat, Gujarat Pakistan,
Kiran Rasheed: Department of Management and Administration Sciences, University of Gujrat, Gujrat Pakistan
Faiq Mahmood: Lyallpur Business School, Government College University Faisalabad, Pakistan
Ahsan Riaz: Lyallpur Business School, Government College University Faisalabad, Pakistan
Mohsin Bashir: Lyallpur Business School, Government College University Faisalabad, Pakistan

International Journal of Energy Economics and Policy, 2023, vol. 13, issue 3, 512-523

Abstract: This study investigates the impact of financial development and economic growth on energy consumption by controlling variables such as urbanization and globalization in developing countries of Asia for the era of 1991-2019. Data related to financial development, economic growth, energy consumption and urbanization is collected from World Development Indicator and data related to globalization is collected from Konjunkturforschungsstelle (KOF) index of globalization. In this research Dynamic seemingly unrelated regression model is applied to test the hypothesis. According to the outcomes of DSUR the impact of financial development on energy consumption is positively substantial as increase of 1 unit in financial development brings 3.07% rise in energy consumption, the effect of GDP on energy consumption is positively influential as increase of 1 unit in GDP brings 0.29% increase in energy consumption and the influence of globalization is unfavorable but substantial as increase of 1 unit in globalization brings decrease of 15.57% in energy consumption. Moreover, the influence of urbanization on energy consumption is positive and considerable, as increase of 1 unit in urbanization brings 11.54% increase in energy consumption. Moreover, there is two way connections among GDP and financial development. Moreover, Asian countries should adopt energy conservation policies.

Keywords: Financial Development (FD); Energy consumption (EC); Dynamic seemingly unrelated regression model (DSUR); World Development Indicator (WDI); Causality (search for similar items in EconPapers)
JEL-codes: F43 O47 O53 Q40 R11 (search for similar items in EconPapers)
Date: 2023
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