Abstract
In recent times, financial development and industrial progression accrue energy demand. Therefore, the present research is investigating the nexuses of energy consumption-financial development indicators for 32 Asian economies including the FDI, economic growth, and urban sprawl. The long-run marginal impacts and causal linkage are estimated through the dynamic seemingly unrelated regression and the heterogeneous causality respectively. The estimates infer that financial development indicators are deteriorating the energy consumption in the Asian region, while both FDI and urban sprawl accrue energy consumption. However, economy-wise estimates infer the heterogeneous impacts on energy consumption. Heterogenous causality infers a bidirectional causality among the financial development indicators and energy consumption. There is a need to devise the energy policies related to the financial sector for sustainable usage energy and a clean environment.
Similar content being viewed by others
References
Akhtar MH, Sheikh MR, Anam A (2016) Financial development, energy consumption and trade openness Nexus: empirical evidence from selected south Asian countries. Pak J Soc Sci 36(1)
Albiman MM, Sulong Z (2017) The linear and non-linear impacts of ICT on economic growth, of disaggregate income groups within SSA region. Telecommun Policy 41(7–8):555–572
Al-Mulali U, Sab CNBC (2012) The impact of energy consumption and CO2 emission on the economic growth and financial development in the Sub Saharan African countries. Energy 39(1):180–186
Al-mulali U, Fereidouni HG, Lee JY, Sab CNBC (2013) Exploring the relationship between urbanization, energy consumption, and CO2 emission in MENA countries. Renew Sust Energ Rev 23:107–112
Charfeddine L, Ben Khediri K (2015) Financial development and environmental quality in UAE: cointegration with structural breaks. Renew Sust Energ Rev 55:1322–1335
Chtioui S (2012) Does economic growth and financial development spur energy consumption in Tunisia? J Econ Int Finance 4(4):150
Çoban S, Topcu M (2013) The nexus between financial development and energy consumption in the EU: a dynamic panel data analysis. Energy Econ 39:81–88
Dogan E, Seker F (2016) An investigation on the determinants of carbon emissions for OECD countries: empirical evidence from panel models robust to heterogeneity and cross-sectional dependence. Environ Sci Pollut Res 23:14646–14655
Dumitrescu EI, & Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Economic Modelling 29(4):1450–1460
Farhani S, Solarin SA (2017) Financial development and energy demand in the United States: new evidence from combined cointegration and asymmetric causality tests. Energy 134:1029–1037
Hafeez M, Chunhui Y, Strohmaier D, Ahmed M, Jie L (2018) Does finance affect environmental degradation: evidence from one belt and one road initiative region? Environ Sci Pollut Res 25:9579–9592. https://doi.org/10.1007/s11356-018-1317-7
Hafeez M, Yuan C, Khelfaoui I, Sultan Musaad O, Waqas Akbar M, Jie L (2019a) Evaluating the energy consumption inequalities in the one belt and one road region: implications for the environment. Energies 12(7):1358
Hafeez M, Yuan C, Shahzad K, Aziz B, Iqbal K, Raza S (2019b) An empirical evaluation of financial development-carbon footprint nexus in one belt and road region. Environ Sci Pollut Res:1–11
Hafeez M, Yuan C, Yuan Q, Zhuo Z, Stromaier D (2019c) A global prospective of environmental degradations: economy and finance. Environ Sci Pollut Res 26(25):25898–25915
Hossain S (2012) An econometric analysis for CO2 emissions, energy consumption, economic growth, foreign trade and urbanization of Japan. Low Car Eco 03:92–105
Islam F, Shahbaz M, Ahmed AU, Alam MM (2013) Financial development and energy consumption nexus in Malaysia: a multivariate time series analysis. Econ Model 30:435–441
Jalil A, Feridun M (2011) The impact of growth, energy and financial development on the environment in China: a cointegration analysis. Energy Econ 33(2):284–291
Kahouli B (2017) The short and long run causality relationship among economic growth, energy consumption and financial development: evidence from South Mediterranean countries (SMCs). Energy Econ 68:19–30
Kakar ZK (2016) Financial development and energy consumption: evidence from Pakistan and Malaysia. Energy Sources, Part B: Economics, Planning, and Policy 11(9):868–873
Katircioglu S (2012) Financial development, international trade and economic growth: the case of sub-Saharan Africa. Ekonomista 15(1):117–127
Katircioglu S, Gokmenoglu KK, Eren BM (2018) Testing the role of tourism development in ecological footprint quality : evidence from top 10 tourist destinations. Environ Sci Pollut Res 25:33611–33619
Liu L, Zhou C, Huang J, Hao Y (2017) The impact of financial development on energy demand: evidence from China. Emerg Mark Financ Trade
Liu J, Yuan C, Hafeez M, & Yuan Q (2018) The relationship between environment and logistics performance: evidence from Asian countries. J Clean Prod 204:282–291
Liu J, Yuan C, Hafeez M, Li X (2019) ISO 14001 certification in developing countries: motivations from trade and environment. J Environ Plan Manag:1–25
Mahalik MK, Mallick H (2014) Energy consumption, economic growth and financial development: exploring the empirical linkages for India. J Dev Areas 48:139–159
Mahalik MK, Babu MS, Loganathan N, Shahbaz M (2017) Does financial development intensify energy consumption in Saudi Arabia? Renew Sust Energ Rev 75:1022–1034
Mahmood MT, Shahab S, Hafeez M (2019) Energy capacity, industrial production, and the environment: an empirical analysis from Pakistan. Environ Sci Pollut Res:1–10
Mielnik O, Goldemberg J (2002) Foreign direct investment and decoupling between energy and gross domestic product in developing countries. Energy Policy 30(2):87–89
Nasreen S, Anwar S (2014) Causal relationship between trade openness, economic growth and energy consumption: a panel data analysis of Asian countries. Energy Policy 69:82–91
Nasreen S, Anwar S, Ozturk I (2017) Financial stability, energy consumption and environmental quality: evidence from south Asian economies. Renew Sust Energ Rev 67:1105–1122
Neequaye NA, Oladi R (2015) Environment, growth, and FDI revisited. Int Rev Econ Financ 39:47–56
Ouyang Y, Li P (2018) On the nexus of financial development, economic growth, and energy consumption in China: new perspective from a GMM panel VAR approach. Energy Econ 71:238–252
Ozturk I, Acaravci A (2013) The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Econ 36:262–267
Pesaran, MH (2004) General diagnostic tests for cross section dependence in panels. available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=572504
Rahman MM, Velayutham E (2020) Renewable and non-renewable energy consumption-economic growth nexus: new evidence from South Asia. Renew Energy 147:399–408
Rauf A, Liu X, Amin W, Ozturk I, Rehman OU, Hafeez M (2018) Testing EKC hypothesis with energy and sustainable development challenges: a fresh evidence from belt and road initiative economies. Environ Sci Pollut Res 25:1–15
Sadorsky P (2010) The impact of financial development on energy consumption in emerging economies. Energy Policy 38(5):2528–2535
Sadorsky P (2011) Financial development and energy consumption in central and eastern European frontier economies. Energy Policy 39(2):999–1006
Tamazian A, Rao BB (2010) Do economic, financial and institutional developments matter for environmental degradation? Evidence from transitional economies. Energy Econ 32(1):137–145
Tang CF, Tan BW (2014) The linkages among energy consumption, economic growth, relative price, foreign direct investment, and financial development in Malaysia. Qual Quant 48(2):781–797
Westerlund J (2007) Testing for error correction in panel data. Oxf Bull Econ Stat 69:709–748
World Bank Group (2017) World development indicators 2017. World Bank. available at https://datacatalog.worldbank.org/dataset/world-developmentindicators
World Development Indicators (WDI) (2018) Available at https://data.worldbank.org/indicator/EG.USE.PCAP.KG.OE?end=2018&start=1960&view=chart
Xu SJ (2012) The impact of financial development on energy consumption in China: based on SYS-GMM estimation. In: Advanced materials research, vol 524. Trans Tech Publications, pp 2977–2981
Yasmeen R, Li Y, Hafeez M, Ahmad H (2018) The trade-environment nexus in light of governance: a global potential. Environ Sci Pollut Res 25:34360–34379
Yuxiang K, Chen Z (2011) Resource abundance and financial development: evidence from China. Res Policy 36(1):72–79
Zaman K, & Abd-el Moemen M (2017) Energy consumption, carbon dioxide emissions and economic development: evaluating alternative and plausible environmental hypothesis for sustainable growth. Renew Sust Energ Rev 74:1119–1130
Ziaei SM (2015) Effects of financial development indicators on energy consumption and CO2 emission of European, East Asian and Oceania countries. Renew Sust Energ Rev 42:752–759
Author information
Authors and Affiliations
Corresponding author
Additional information
Responsible editor: Nicholas Apergis
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Yang, L., Hui, P., Yasmeen, R. et al. Energy consumption and financial development indicators nexuses in Asian economies: a dynamic seemingly unrelated regression approach. Environ Sci Pollut Res 27, 16472–16483 (2020). https://doi.org/10.1007/s11356-020-08123-6
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-020-08123-6