How Does the Stock Market Development React to Energy Consumption? Evidence from the ARDL Panel Approach

Derouez Faten, Alharbi Farea, Mathlouthi Naim, Ifa Adel, Ahmed Nazar and Alrawad Mahmaod ()
Additional contact information
Derouez Faten: Department of Quantitative Method, School of Business, King Faisal University, Al Ahsa 31982, Saudi Arabia
Alharbi Farea: Economics Finance Department, College of Business Administration, Taif University, Taif 21944, Saudi Arabia
Mathlouthi Naim: Law Department, College of Law, Prince Mohammad Bin Fahad University, Saudi Arabia
Ifa Adel: Faculty of Economics and Management of Sousse, Tunisia
Ahmed Nazar: Department of Quantitative Method, School of Business, King Faisal University, Al Ahsa 31982, Saudi Arabia
Alrawad Mahmaod: Department of Quantitative Method, School of Business, King Faisal University, Al Ahsa 31982, Saudi Arabia

Economics, 2025, vol. 13, issue 1, 247-265

Abstract: This article examines the relationship between stock market development and energy consumption in the Gulf Cooperation Council (GCC) countries using panel data from 1971-2021 and ARDL panel and cross-section techniques. The long-term results show that market capitalization has a significant effect on oil consumption. In contrast, the value of shares traded positively and significantly influences the consumption of oil and electricity. Short-term findings indicate that the overall size of the stock market does not significantly affect electricity usage. This suggests that achieving the desired energy-saving goals may require policies that account for the influence of stock market on energy demand, rather than excluding this factor. Given these findings, policymakers in GCC countries should take into account the intricate and various effects that stock market development have on energy consumption. Accordingly, to reduce energy consumption, policies should not solely focus on energy demand and income relationships. Instead, policies should encourage improved corporate governance practices that incentivize companies to reduce their energy consumption to improve their financial performance and increase their share prices. This can be achieved by encouraging companies to invest in energy-efficient technologies and reducing their reliance on energy-intensive projects. Additionally, policymakers should consider regulating the stock market to promote environmentally responsible investments and reduce the financing of energy-intensive projects.

Keywords: Saudi Arabia; development; stock market; energy consumption; ARDL (search for similar items in EconPapers)
JEL-codes: D81 F1 G14 G32 P33 Q4 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/eoik-2025-0006 (text/html)

Related works:
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:vrs:econom:v:13:y:2025:i:1:p:247-265:n:1006

DOI: 10.2478/eoik-2025-0006

Access Statistics for this article

Economics is currently edited by Stelios Bekiros

More articles in Economics from Sciendo
Bibliographic data for series maintained by Peter Golla ().