What Is the role of Financial Development and Energy Consumption on Economic Growth? New Evidence from North African Countries
International Journal of Finance & Banking Studies, Vol. 3, No. 1, 2014
Posted: 6 Oct 2016
Date Written: 2014
This paper aims to test the validity of the causality between financial development and economic growth on energy consumption in three of North African countries. The study employs error correction model and Granger causaility test to analyze a dataset for three North African countries covering a period from 1980 to 2010. The applied model is based on demand function for energy to assess the existing of causal relationship of energy with financial development, and economic growth, in Algeria, Egypt, and Tunisia. Empirical results provide a positive significant relating financial development and energy consumption in Algeria, and Tunisia. On the other hand, Egypt’s results show a negative significant relationship relating energy consumption and financial development. The paper is valuable to policy makers in North African countries in their pursuit for achieving economic growth as it clarifies the urge for the financial development reforms to stimulate investment and growth.
Keywords: Financial Development; Economic Growth; Energy consumption
JEL Classification: F43, Q43, R32
Suggested Citation: Suggested Citation