Does financial development increase energy consumption? The role of industrialization and urbanization in Tunisia

By Muhammad Shahbaz, Hooi Hooi Lean. 2011

852 citations recorded by the source corpus.

This paper assesses the relationship among energy consumption, financial development, economic growth, industrialization and urbanization in Tunisia from 1971 to 2008. The autoregressive distributed lag bounds testing approach to cointegration and Granger causality tests is employed for the analysis. The result confirms the existence of long-run relationship among energy consumption, economic growth, financial development, industrialization and urbanization in Tunisia. Long-run bidirectional causalities are found between financial development and energy consumption, financial development and industrialization, and industrialization and energy consumption. Hence, sound and developed financial system that can attract investors, boost the stock market and improve the efficiency of economic activities should be encouraged in the country. Nevertheless, promoting industrialization and urbanization can never be left out from the process of development. We add light to policy makers with the role of financial development, industrialization and urbanization in the process of economic development.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/e3daacb0435476ff56d2a7161ac2f7b2b8e3ae40

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Citations in the corpus

How strong is the causal relationship between globalization and energy consumption in developed economies? A country-specific time-series and panel analysis (2018, background): “…curve (EKC) hypothesis, we also find many recent studies that have extended the relationship between economic growth and energy consumption by incorporating financial development and urbanization into the energy demand function (Shahbaz and Lean 2012; Islam et al. 2013; Menegaki and Ozturk 2013).”
Trivariate Causality between Economic Growth, Urbanisation and Electricity Consumption in Angola: Cointegration and Causality Analysis (2013, background): “Economic growth may in turn also affect either electricity consumption or urbanisation (see Abdel-Rahman et al. 2006; Davis and Henderson, 2003; Liu, 2009; Shahbaz and Lean, 2012a).”
Does moving towards renewable energy causes water and land inefficiency? An empirical investigation (2016, background): “The number of investigated countries in this paper is 58.1 We transformed all the variables into logarithmic form, which produces better result compared to the linear functional form (Shahbaz and Lean, 2012).”
Does financial development mitigate carbon emissions? Evidence from heterogeneous financial economies (2020, background): “…that respectively allows households to patronise equipment that demands energy and firms to expand their existing business and patronise energy-demanding machines and equipment that could contribute to the rise of carbon emissions (Acheampong, 2019; Sadorsky, 2010, 2011; Shahbaz & Lean, 2012).”
Urbanization and renewable and non-renewable energy consumption in OECD countries: An empirical analysis (2014, background): “In contrast, Shahbaz and Lean (2012) demonstrate a unidirectional causality running from energy consumption to urbanization for Tunisia.”
Financial Development, Environmental Quality, Trade and Economic Growth: What Causes What in MENA Countries (2015, neutral): “This problem has led some of wich recent Granger causality basezd-studies investigating the causal links between energy consumption and economic growth to incorporate capital and labor in the multivariate models (e.g. Apergis and Payne, 2010a; Bartleet and Gounder, 2010; Zhixin and Xin, 2011 ; Sador”
Economic growth, financial development, urbanisation and electricity consumption nexus in UAE (2017, methodology): “Urbanisation creates economic activities and pockets of dense population which results in increasing electricity consumption (Mishra et al., 2009; Shahbaz & Lean, 2012).”