Financial development and energy consumption nexus in emerging economies

This study aims to examine the relationship between financial development, energy price, real income, and energy consumption in 17 emerging economies. In doing so, the financial development has been handled with three different dimensions (banking sector, stock market, and bond market) and the effects of each financial development dimension on energy consumption is investigated. For this purpose, the annual data of 1991–2015 are analyzed using the common correlated effect (CCE) estimator to take into account the cross-sectional dependence. The results show that bond market development is the most efficient dimension to reduce the energy consumption.