Investigating the Financial Development on Energy Consumption

In the light of the fact that our available resources are limited and in particular the energy has a significant and important role in economic growth and development, it is thus important to determine key factors impacting on energy demand. In this paper investigation is made on how the financial depth impacts on energy consumption through the economic growth channel, using the Generalized Method of Moments technique covering the period 1978-2020. The results show that financial depth does affect energy consumption through the channel of economic growth. The Findings also indicate that financial depth and gross domestic product had positive impact on energy consumption while the energy price had the negative impact on energy consumption. According to our research findings, one percent increase in GDP and energy prices brings about 1.42 and 0.10 percent change in energy consumption, respectively. Also, the indirect impact of financial development on energy consumption through economic growth channel is 0.0568%. Also, the results of this study help Policymakers adopt an effective planning for energy demand and promote private sector development in order to achieve economic growth envisaged in the plan.