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The nexus between financial development and energy consumption in the EU: A dynamic panel data analysis

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  • Çoban, Serap
  • Topcu, Mert

Abstract

The relationship between financial development and energy consumption has newly started to be discussed in energy economics literature. This paper investigates this issue in the EU over the period 1990–2011 by using system-GMM model. No significant relationship is found in the EU27. The empirical results, however, provide strong evidence of the impact of the financial development on energy consumption in the old members. Greater financial development leads to an increase in energy consumption, regardless of whether financial development stems from banking sector or stock market. By contrast, we find for the new members that the impact of financial development on energy consumption depends on how financial development is measured. Using bankindex the impact of financial development displays an inverted U-shaped pattern while no significant relationship is detected once it is measured using stockindex.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 39 (2013)
Issue (Month): C ()
Pages: 81-88

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Handle: RePEc:eee:eneeco:v:39:y:2013:i:c:p:81-88

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Web page: http://www.elsevier.com/locate/eneco

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Keywords: Financial development; Energy consumption; System-GMM; EU;

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Cited by:
  1. Daher, Hassan & Masih, A.Mansur M. & Ibrahim, Mansor H., 2014. "Islamic Banks’ Capital Buffers: Unique Risk Exposures and the Disciplining Effects of Charter Values," MPRA Paper 56947, University Library of Munich, Germany.
  2. Paresh Narayan & Russell Smyth, 2014. "Applied Econometrics and a Decade of Energy Economics Research," Development Research Unit Working Paper Series 21-14, Monash University, Department of Economics.
  3. Ersan Ersoy & Ulaþ Ünlü, 2013. "Energy Consumption and Stock Market Relationship: Evidence from Turkey," International Journal of Energy Economics and Policy, Econjournals, vol. 3(Special), pages 34 - 40.

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