TY - JOUR
T1 - Nexus between financial development & energy intensity
T2 - Two sides of a coin?
AU - Canh, Nguyen Phuc
AU - Thanh, Su Dinh
AU - Nasir, Muhammad Ali
PY - 2020/9/15
Y1 - 2020/9/15
N2 - This study examines the multidimensional impact of financial development (FD) on consumption energy intensity and production energy intensity. A global sample of 81 economies consisting of three subsamples (29 high income [HIEs], 21 upper middle income [UMEs] and 31 low and lower middle income [LMEs]) from 1997 to 2013 is analyzed by employing several estimators and an inclusive estimation strategy for empirical robustness. Our key findings suggest that: First, FD is broadly found to increase production energy intensity except for the negative effects of financial institutions’ efficiency. The results also confirm the long-run relationship. The financial depth and financial access appear to reduce consumption energy intensity, while financial efficiency has the opposite effect. Financial institutions have increasing, while financial markets have decreasing impact on consumption energy intensity in the long run. Second, in the face of an oil price shock, countries with higher levels of FD experience a reduce production energy intensity, while the countries with stronger financial institutions experience a reduction in consumption energy intensity, however, opposite is true in the case of financial markets. Third, the FD appears to decrease production energy intensity in HIEs, while it has increasing effect in UMEs and mixed effects in LMEs. Meanwhile, the FD induces higher consumption energy intensity in LMEs, which is same for the impacts of financial markets in UMEs and HIEs. Lastly, financial institutions appear to reduce consumption energy intensity in UMEs and HIEs. Our findings have profound policy implications in the context of the debate on the role of finance in energy efficiency.
AB - This study examines the multidimensional impact of financial development (FD) on consumption energy intensity and production energy intensity. A global sample of 81 economies consisting of three subsamples (29 high income [HIEs], 21 upper middle income [UMEs] and 31 low and lower middle income [LMEs]) from 1997 to 2013 is analyzed by employing several estimators and an inclusive estimation strategy for empirical robustness. Our key findings suggest that: First, FD is broadly found to increase production energy intensity except for the negative effects of financial institutions’ efficiency. The results also confirm the long-run relationship. The financial depth and financial access appear to reduce consumption energy intensity, while financial efficiency has the opposite effect. Financial institutions have increasing, while financial markets have decreasing impact on consumption energy intensity in the long run. Second, in the face of an oil price shock, countries with higher levels of FD experience a reduce production energy intensity, while the countries with stronger financial institutions experience a reduction in consumption energy intensity, however, opposite is true in the case of financial markets. Third, the FD appears to decrease production energy intensity in HIEs, while it has increasing effect in UMEs and mixed effects in LMEs. Meanwhile, the FD induces higher consumption energy intensity in LMEs, which is same for the impacts of financial markets in UMEs and HIEs. Lastly, financial institutions appear to reduce consumption energy intensity in UMEs and HIEs. Our findings have profound policy implications in the context of the debate on the role of finance in energy efficiency.
KW - Efficiency
KW - Energy consumption
KW - Financial institutions
KW - Financial markets
KW - Panel data
KW - Production
UR - http://www.scopus.com/inward/record.url?scp=85086357032&partnerID=8YFLogxK
U2 - 10.1016/j.jenvman.2020.110902
DO - 10.1016/j.jenvman.2020.110902
M3 - Article
AN - SCOPUS:85086357032
VL - 270
JO - Journal of Environmental Management
JF - Journal of Environmental Management
SN - 0301-4797
M1 - 110902
ER -