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Modelling financial development and electricity consumption nexus for Ghana

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  • Yeboah Asuamah, Samuel

Abstract

The paper contributes to the body of knowledge in the area of energy consumption and financial sector development by empirically assessing the long run and short run links and causality between electricity consumption and financial development (proxied by credit to the private sector). The paper is based on quantitative causal study using time series data from 1970-2011. Data were analysed using Autoregressive Distributed Lag Model (ARDL) and Granger Causality Test. There is significant cointegration relationship among the series variables in the model estimated. There is no statistical significant long run and short run relationship between financial development (proxied by credit to the private sector) and electricity consumption. There is bidirectional causality between financial development and electricity consumption. This calls for future studies to contribute to the debate by assessing structural breaks in the series. Policy makers should consider these findings in planning for electricity consumption to avoid unplanned energy shortage which might have adverse effect on the economy.

Suggested Citation

  • Yeboah Asuamah, Samuel, 2016. "Modelling financial development and electricity consumption nexus for Ghana," MPRA Paper 70097, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:70097
    as

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    References listed on IDEAS

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    Cited by:

    1. Thierry Mamadou Asngar, 2022. "Does financial development improve access to electricity in sub-Saharan Africa?," SN Business & Economics, Springer, vol. 2(9), pages 1-18, September.

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    More about this item

    Keywords

    Financial Development; Capital Stock; Electricity Consumption; Bi-directional Causality; Credit to the Private Sector.;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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