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Article

Examining the Impact of Financial Development on Energy Production in Emerging Economies

by 1,2,* and 1
1
Department of Economics, University of Minnesota Duluth, Duluth, MN 55812, USA
2
Institute on the Environment, University of Minnesota, St. Paul, MN 55108, USA
*
Author to whom correspondence should be addressed.
Academic Editor: Michael Polemis
J. Risk Financial Manag. 2021, 14(2), 88; https://doi.org/10.3390/jrfm14020088
Received: 30 January 2021 / Revised: 12 February 2021 / Accepted: 15 February 2021 / Published: 20 February 2021
(This article belongs to the Special Issue Energy Economics and Finance)
Global energy production has been on the rise for many years, and reliance on traditional sources of energy remains strong. The extraction and production of energy can serve as an important avenue of growth, particularly for developing economies. To undertake such capital intensive project requires significant investment, and, intuitively, a well-functioning domestic financial system would be expected to aid in the growth of such industries. We investigate the relationship between financial development and energy production for 15 emerging countries, over the period of 1995–2017. After establishing the presence of a unit root, based upon panel data methods, a cointegrating relationship between financial development and energy production is confirmed. The results of the fully modified ordinary least squares (FMOLS) estimation establish a long run relationship in 11 of 15 countries in the sample. Panel Granger causality results provide a link between energy production and foreign direct investment (FDI), while such a link is absent for domestic credit. Policymakers should understand that development of the energy sector can provide an incentive for foreign firms to invest in emerging economics. View Full-Text
Keywords: financial development; energy production; panel cointegration; panel causality financial development; energy production; panel cointegration; panel causality
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MDPI and ACS Style

Wilmot, N.A.; Taivan, A. Examining the Impact of Financial Development on Energy Production in Emerging Economies. J. Risk Financial Manag. 2021, 14, 88. https://doi.org/10.3390/jrfm14020088

AMA Style

Wilmot NA, Taivan A. Examining the Impact of Financial Development on Energy Production in Emerging Economies. Journal of Risk and Financial Management. 2021; 14(2):88. https://doi.org/10.3390/jrfm14020088

Chicago/Turabian Style

Wilmot, Neil A., and Ariuna Taivan. 2021. "Examining the Impact of Financial Development on Energy Production in Emerging Economies" Journal of Risk and Financial Management 14, no. 2: 88. https://doi.org/10.3390/jrfm14020088

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