Financial development and energy consumption nexus in Malaysia: A multivariate time series analysis

Faridul Islam (), Muhammad Shahbaz, Ashraf U. Ahmed and Md. Mahmudul Alam ()

Economic Modelling, 2013, vol. 30, issue C, 435-441

Abstract: Despite a bourgeoning literature on the existence of long run relationship between consumption of energy and economic growth, results on the direction of causality so far, remain elusive. A growing economy needs more energy, which is exacerbated by growing population. Evidence suggests that financial development can reduce energy use by increasing energy efficiency. Economic growth and energy consumption in Malaysia have been rising in tandem over the past several years. The three public policy objectives of Malaysia are: economic progress, population growth and financial development. It is of interest to the policymakers to understand the dynamic interrelation among the stated objectives. The paper explores the existence of a long run relation among energy use, aggregate production, financial development and population in Malaysia; and causality using the Vector Error Correction Model (VECM). The results suggest that energy consumption is influenced by economic growth and financial development, both in the short and the long run, but the population–energy relation holds only in the long run. The findings have important policy implications for balancing economic growth vis-à-vis energy consumption for Malaysia, as well as other emerging nations.

Keywords: Financial development; Energy consumption; ARDL; Economic growth; Malaysia (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (258)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999312003082
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Financial Development and Energy Consumption Nexus in Malaysia: A Multivariate Time Series Analysis (2019)
Working Paper: Financial Development and Energy Consumption Nexus in Malaysia: A Multivariate Time Series Analysis (2019)
Working Paper: Financial development and energy consumption nexus in Malaysia: A multivariate time series analysis (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:30:y:2013:i:c:p:435-441

DOI: 10.1016/j.econmod.2012.09.033

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().