4.5 Article

Financial Development, Financial Inclusion and Primary Energy Use: Evidence from the European Union Transition Economies

Journal

ENERGIES
Volume 14, Issue 12, Pages -

Publisher

MDPI
DOI: 10.3390/en14123638

Keywords

financial development; financial institutions access; primary energy use; Lagrange multiplier bootstrap cointegration test; bootstrap Granger causality test

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Funding

  1. 2020 Development Fund of the Babes-Bolyai University

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The research analyzed the impact of financial sector development indicators and financial institutions access on primary energy use in European Union transition members. It found that the causality direction varied among countries, but overall, financial development indicators had a positive effect on primary energy use, while financial institutions' access had a negative impact.
The main objective of the research is to analyze the impact of financial sector development indicators and financial institutions access on primary energy use based on a sample of European Union transition members over 20 years period (1996-2017) through panel cointegration and causality tests that allow for cross-section dependence. The causality analysis revealed that the direction of the causality among financial development indicators, financial institutions access, and primary energy use varied among the countries. On the other side, panel cointegration coefficients disclosed that the financial development index positively affected the primary energy use, but private credit did not have a significant effect on the primary energy use. Furthermore, financial institutions' access had a significant negative impact on primary energy use. However, country-level cointegration coefficients indicated that the financial development index positively affected the primary energy use in Bulgaria, Croatia, Czechia, Hungary, and Slovenia, and private credit also had a positive impact on primary energy use in Bulgaria, Czechia, Estonia, Hungary, Lithuania, Poland, and Slovakia, but the effect of financial development index on primary energy use was found to be very higher than that of private credit. Moreover, financial institutions' access negatively affected the primary energy use in Croatia, Estonia, Hungary, Poland, and Romania.

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