Financial development and energy consumption: Evidence from a heterogeneous panel of Asian countries

This paper examined relationships between financial development and energy consumption in Asia for the period of 1980–2012. For the purpose of the empirical analysis, it performed the heterogeneous panel causality test suggested by Dumitrescu and Hurlin [1]. The findings of the panel cointegration test indicated that there was a long run equilibrium relationship between finance and energy consumption in the region. Moreover, the heterogeneous panel causality test detected a unidirectional causality from energy consumption to financial development but not vice versa. These results indicate that an expansion of energy usage could be a driving force behind financial development in Asia.