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The Influence of Financial Development on Energy Consumption: Worldwide Evidence

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  • Xiaoxin Ma

    (Economics and Management School, Wuhan University, Wuhan 430072, China)

  • Qiang Fu

    (Postdoctoral Workstation of China Construction Bank, Beijing 100032, China
    Postdoctoral Research Station of Renmin University of China, Beijing 100872, China)

Abstract

In this study, we investigated the influence of overall financial development and its components on energy consumption using the panel data of 120 countries and the generalized method of moments (GMM). By dividing the sample into developed and developing countries, we further examined the national differences of the impact of financial development on energy consumption. The empirical results indicate that the overall financial development significantly positively impacts energy consumption from a worldwide perspective, and its two components (financial institution and the financial market) have the same effect. The analysis of national differences indicates that the financial development also positively impacts energy consumption in developing countries but with no obvious effect in developed countries. The results also suggest that financial development cannot be used to restrain the increase in energy consumption from the global perspective, and policymakers in developing countries must balance the relationship between the development of the financial sector and energy consumption.

Suggested Citation

  • Xiaoxin Ma & Qiang Fu, 2020. "The Influence of Financial Development on Energy Consumption: Worldwide Evidence," IJERPH, MDPI, vol. 17(4), pages 1-15, February.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:4:p:1428-:d:324123
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