ICT, Financial Development, Economic Growth and Electricity Consumption: New Evidence from Malaysia

This article investigates the impact of information and communication technology (ICT), financial development and economic growth on electricity consumption for Malaysian economy, utilizing quarter frequency data for the period of 1990-2015. In order to examine the long-run relationship, a cointegration approach that provides for structural break is applied. The causal relationship between the variables is investigated by employing Toda-Yamamoto Granger causality approach, and robustness of causality results is confirmed by the innovative accounting method. The results provide evidence for the presence of cointegration between the variables. ICT has positive effect on electricity consumption. Financial development increases electricity consumption. Economic growth is positively associated with electricity consumption. The causality analysis indicates the feedback effect between ICT and electricity consumption. The bidirectional causality is found between economic growth and electricity consumption. Financial development causes electricity consumption and electricity consumption in turn causes financial development in Granger sense. This article opens fresh insights for policymakers to utilize ICT, financial development and economic growth as economic tools for sustainable economic development.