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Financial development and energy consumption: Is the MENA region different?

Author

Listed:
  • Brahim Gaies

  • Olfa Kaabia
  • Rim Ayadi

    (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne)

  • Khaled Guesmi
  • Ilyes Abid

Abstract

This paper examines the relationship between financial development and energy consumption estimations in the major MENA countries (Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates and Yemen) over the period 1996 to 2014. We consider the energy use in kg of oil equivalent per capita as a dependent variable that reflects the cross-country energy consumption. We measure the level of financial development in the MENA countries by considering banking indicators. Extending the model of Sadorsky (2011), we estimate both linear and non-linear dynamic panel model. We use new robust econometrics to take into account heterogeneity and nonlinearity and we control the estimation results for the period of the global financial crisis. The results of the study report a positive and statistically significant relationship between the intermediation capacity of the banking system as well as its size and energy consumption. The findings also confirm a non-linear and inverted U-shaped relationship between financial development and energy demand for the MENA region. This implies that initially energy demand increases with financial development and then, at a turning point of financial development, it declines. The policy implications of these results are discussed.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Brahim Gaies & Olfa Kaabia & Rim Ayadi & Khaled Guesmi & Ilyes Abid, 2019. "Financial development and energy consumption: Is the MENA region different?," Post-Print hal-04760730, HAL.
    • Handle: RePEc:hal:journl:hal-04760730
    DOI: 10.1016/j.enpol.2019.111000
    as

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