Evaluating the effect of financial development on energy use in ASEAN economies

Purpose Energy use plays a pivotal role in sustaining economic growth and improving living standards, particularly in rapidly developing regions such as ASEAN. This study aims to examine the effect of financial development on energy use in ASEAN countries over the period 1996–2020. Design/methodology/approach To ensure robust analysis, cross-sectional dependence is first tested, followed by the application of second-generation unit root tests. Long-run relationships among the variables are assessed using Pedroni, Kao and Westerlund cointegration tests, all of which confirm the existence of cointegration. For the estimation of long-run coefficients, Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS) and Canonical Cointegrating Regression (CCR) methods are used. Findings The results of this study indicate that financial development exerts a positive influence on energy use in the long run. Furthermore, control variables including economic growth, technological innovation and governance quality are also found to positively affect energy use. Originality/value The findings of this study highlight the critical role of financial development in shaping energy demand across the ASEAN region.