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Exploring the Impacts of Electricity Consumption and Financial Development on Urbanization

Author

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  • Mehedi Hasan

    (Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh)

  • Md. Obidul Haque

    (Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh)

  • Saddam Hossain

    (Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh)

  • Md. Ahsan Habib

    (Department of Economics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh)

Abstract

This paper proposes to make a contribution to the existing literature through examining the impacts of electricity consumption and financial development on urbanization in Bangladesh during 1974-2014 by employing modern econometric techniques. We conduct dynamic nexus among financial development, electricity consumption, and urbanization by utilizing ARDL technique. The ARDL technique is employed to find dynamics among variables and to check the long run connection. This analysis performed the unit root problem through the ADF test where variables are I(0). Long-term associations are found by checking the bound test. Both electricity consumption and financial development are significant to affect urbanization. The long-run elasticities are higher impacts on urbanization than the short-run elasticities. Also, various diagnostic tests are made such as serial correlation, heteroscedasticity, normality. To evaluate the parameter stability, we execute the CUSUM test and CUSUM square. The results confirmed that there is no structural break in the economy. The paper provides some policy recommendations based on the results.

Suggested Citation

  • Mehedi Hasan & Md. Obidul Haque & Saddam Hossain & Md. Ahsan Habib, 2021. "Exploring the Impacts of Electricity Consumption and Financial Development on Urbanization," International Journal of Science and Business, IJSAB International, vol. 5(1), pages 82-91.
    • Handle: RePEc:aif:journl:v:5:y:2021:i:1:p:82-91
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    References listed on IDEAS

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    1. Usama Al-Mulali & Ilhan Ozturk & Hooi Lean, 2015. "The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 621-644, October.
    2. Muzafar Habibullah & Yoke-Kee Eng, 2006. "Does Financial Development Cause Economic Growth? A Panel Data Dynamic Analysis for the Asian Developing Countries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 11(4), pages 377-393.
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