ROLE OF FINANCIAL DEVELOPMENT FOR SOLVING THE ENERGY INSECURITY IN ASIA

Pichayakone Rakpho, Woraphon Yamaka, Wachirawit Puttachai and Paravee Maneejuk
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Pichayakone Rakpho: Center of Excellence in Econometrics, Faculty of Economics, Chiang Mai University, Chiang Mai 50200, Thailand
Woraphon Yamaka: Center of Excellence in Econometrics, Faculty of Economics, Chiang Mai University, Chiang Mai 50200, Thailand
Wachirawit Puttachai: Center of Excellence in Econometrics, Faculty of Economics, Chiang Mai University, Chiang Mai 50200, Thailand
Paravee Maneejuk: Center of Excellence in Econometrics, Faculty of Economics, Chiang Mai University, Chiang Mai 50200, Thailand

The Singapore Economic Review (SER), 2021, vol. 66, issue 02, 413-434

Abstract: This study aims to investigate the nonlinear effect of financial development on energy security in Asia-16 countries over the period 2000–2016 using the proposed Panel Smooth Transition model for heterogeneity in time trends. Our model shows a single-threshold effect on financial development and energy security relationship, whereas energy accessibility, renewable energy share, and energy intensity are used as indicators of energy security. It implies that the sample can be split into two regimes: low- and high-FDI regime, we choose FDI as the threshold variable because it is a source of innovation that could reduce the demand for energy. The findings indicate that financial development goes hand-in-hand with energy accessibility and renewable energy share, and it also reduces the energy inefficiency in the economy. We also find that the contribution of financial development on renewable energy share becomes more substantial when the FDI is greater than the threshold point (0.9343% of GDP). However, the value of crude oil imports shows a negative impact on energy security in our empirical model.

Keywords: Financial development; sustainable development goals; energy insecurity; panel smooth transition model for heterogeneity in time trends (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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DOI: 10.1142/S0217590820430018

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