Financial Development and Energy Consumption Nexus in 32 Belt and Road Economies

Kudaybergenov Janpolat, Shoirahon Odilova, Abdusalomova Nodira, Raufhon Salahodjaev, Anastas Khachaturov


Current study sheds the light on the financial development-energy nexus in 32 Belt and Road economies during 2000-2015.  Financial development is proxied by domestic credit to private sector. We first examine the order of integration by employing five different panel unit-root tests. Further, we confirm long-term relationship between the variables by running Pedroni and Kao panel cointegration tests. Fully Modified Ordinary Least Squares (FMOLS) regression reveal positive long-term relationship between financial development and energy use. Results of Dumitrescu-Hurlin panel causality test fail to reveal causal relationship between financial development and energy in our sample.

Keywords: energy consumption, financial development, Belt and Road countries

JEL Classifications: G2, O4


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