Energy consumption and financial development in South
Africa

This paper examines the dynamic relationship between energy consumption and financial development in South Africa during the period 1980-2013. In order to address the omission of variable bias, the study has included economic growth as an intermittent variable between financial development and energy consumption. Unlike some previous studies, this study uses three proxies for financial development: i) domestic credit to the private sector as a percentage of GDP as a proxy for financial institutions’ depth; ii) bank credit to bank deposits as a proxy for financial institutions’ stability; and iii) bank lending-deposit spread as a proxy for financial institutions’ efficiency. Using the ARDL bounds testing approach to cointegration and Granger-causality test, the obtained results show that there is a distinct long-run unidirectional causal flow from financial development to energy consumption in South Africa. This applies irrespective of which proxy has been used to measure the level of financial development. The study also finds that there is a long-run unidirectional causality from economic growth to energy consumption, and a unidirectional causality from economic growth to financial development when bank lending-deposit interest rates spread is used as a proxy for financial development. This, therefore, implies that energy consumption in South Africa is largely driven by the growth-led financial development in the long run.

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Non-bank financial institutions and economic growth: Evidence from Africa’s three largest economies

South African Journal of Economic and Management Sciences ◽

10.4102/sajems.v20i1.1545 ◽

2017 ◽

Vol 20 (1) ◽

Cited By ~ 2

Author(s):

Ronald Rateiwa ◽

Meshach J. Aziakpono

Keyword(s):

Economic Growth ◽

South Africa ◽

Financial Institutions ◽

Time Series Data ◽

Bank Lending ◽

Series Data ◽

The Sustainable Development ◽

Long Run ◽

The Relationship

Background: In order for the post-2015 world development agenda – termed the sustainable development goals (SDGs) – to succeed, there is a pronounced need to ensure that available resources are used more effectively and additional financing is accessed from the private sector. Given that traditional bank lending has slowed down, the development of non-bank financing has become imperative. To this end, this article intends to empirically test the role of non-bank financial institutions (NBFIs) in stimulating economic growth.Aim: The aim of this article is to empirically test the existence of a long-run equilibrium relationship between economic growth and the development of NBFIs, and the causality thereof.Setting: The empirical assessment uses time-series data from Africa’s three largest economies, namely, Egypt, Nigeria and South Africa, over the period 1971–2013.Methods: This article uses the Johansen cointegration and vector error correction model within a country-specific setting.Results: The results showed that the long-run relationship between NBFI development and economic growth is relatively stronger in Egypt and South Africa, than in Nigeria. Evidence in respect of Nigeria shows that such a relationship is weak. The nature of the relationship between NBFI development and economic growth in Egypt is positive and significant, and predominantly bidirectional. This suggests that a virtuous relationship between NBFIs and economic growth exists in Egypt. In South Africa, the relationship is positive and significant and predominantly runs from NBFI development to economic growth, implying a supply-leading phenomenon. In Nigeria, the results are weak and mixed.Conclusion: The study concludes that in countries with more developed financial systems, the role of NBFIs and their importance to the economic growth process are more pronounced. Thus, there is need for developing policies targeted at developing the NBFI sector, given their potential to contribute to economic growth.

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Exports, financial development and economic growth in Pakistan

International Journal of Development Issues ◽

10.1108/ijdi-09-2013-0065 ◽

2014 ◽

Vol 13 (2) ◽

pp. 155-170 ◽

Cited By ~ 15

Author(s):

Muhammad Shahbaz ◽

Mohammad Mafizur Rahman

Keyword(s):

Economic Growth ◽

Error Correction ◽

Financial Development ◽

Error Correction Model ◽

Causality Analysis ◽

Bounds Testing ◽

Causality Test ◽

Correction Model ◽

Content Type ◽

Long Run

Purpose – This paper aims to explore the relationship between exports, financial development and economic growth in case of Pakistan. Design/methodology/approach – The autoregressive distributed lag bounds testing approach to cointegration and error correction model are applied to test the long-run and short-run relationships, respectively. The direction of causality between the variables is investigated by the vector error correction model Granger causality test and robustness of causality analysis is tested by applying innovative accounting approach. Findings – The analysis confirms cointegration for the long-run relation between exports, economic growth and financial development in case of Pakistan. The results indicate that economic growth and financial development spur exports growth in Pakistan. The causality analysis reveals feedback hypothesis that exists between financial development and economic growth, financial development and exports, and, exports and economic growth. Originality/value – This study provides new insights for policy makers to sustain exports growth by stimulating economic growth and developing financial sector in Pakistan.

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Economic Growth And Carbon Emissions In South Africa: An Empirical Investigation

International Business & Economics Research Journal (IBER) ◽

10.19030/iber.v10i7.4668 ◽

2011 ◽

Vol 10 (7) ◽

pp. 75 ◽

Cited By ~ 2

Author(s):

Nicholas M. Odhiambo

Keyword(s):

Economic Growth ◽

South Africa ◽

Energy Consumption ◽

Co2 Emissions ◽

Carbon Emissions ◽

Empirical Investigation ◽

Output Growth ◽

Bounds Testing ◽

Conservation Policies ◽

Long Run

In this paper we examine the causal relationship between CO2 emissions and economic growth in South Africa - using the newly developed ARDL-Bounds testing approach. We incorporate energy consumption in a bivariate causality setting between CO2 emissions and economic growth, thereby creating a simple trivariate model. Our empirical results show that there is a distinct unidirectional causal flow from economic growth to carbon emissions in South Africa. We also find that energy consumption Granger-causes both carbon emissions and economic growth. We recommend that energy conservation policies, as well as appropriate forms of renewable energy, should be explored in South Africa in order to enable the country to reduce its carbon emission footprint without necessarily sacrificing its output growth. The results apply irrespective of whether the causality is estimated in the short or in the long run.

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FINANCIAL INTEGRATION, ENERGY CONSUMPTION AND ECONOMIC GROWTH IN VIETNAM

Annals of Financial Economics ◽

10.1142/s2010495220500104 ◽

2020 ◽

Vol 15 (03) ◽

pp. 2050010

Author(s):

NGUYEN MINH HA ◽

BUI HOANG NGOC ◽

MICHAEL MCALEER

Keyword(s):

Economic Growth ◽

Energy Consumption ◽

Financial Integration ◽

Positive Impact ◽

Vector Autoregressions ◽

Bounds Testing ◽

Causality Test ◽

Empirical Results ◽

Long Run ◽

The Impact

The paper investigates the impact of financial integration and energy consumption on economic growth in Vietnam during the period 1986–2017. By applying the Autoregressive Distributed Lag ARDL) approach proposed by Pesaran et al. [Pesaran, MH, Y Shin and RJ Smith (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.] and the bounds cointegration test, the empirical results show the existence of long-term cointegration among all the variables, and that an increase in financial integration leads to an increase in economic growth in the long run. There is a positive impact of energy consumption on growth in both the short run and long run. The causality test of Toda and Yamamoto [Toda, HY and T Yamamoto (1995). Statistical inference in vector autoregressions with possibly integrated processes. Journal of Econometrics, 66(1–2), 225–250.] confirm that there is bi-directional causality between the pairs, financial integration and economic growth, and energy consumption and growth, which support the feedback hypothesis. However, there is only uni-directional causality from energy consumption to financial integration. The empirical results should be of major empirical importance for public policy decision-makers to plan sustainable development goals for Vietnam.

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Petroleum Consumption and Financial Development in Malaysia

International Journal of Management Studies ◽

10.32890/ijms.23.2.2016.10470 ◽

2016 ◽

Author(s):

Jen-Eem Chen ◽

Yan-Ling Tan ◽

Chin-Yu Lee ◽

Lim-Thye Goh

Keyword(s):

Economic Growth ◽

Energy Consumption ◽

Granger Causality ◽

Financial Development ◽

Granger Causality Test ◽

Financial Sector ◽

Causality Test ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run

This paper aims to contribute to the existing literature by examining the dynamic relationship among petroleum consumption, financial development, economic growth and energy price. The sample of this study is based on the Malaysian annual data from 1980 to 2010. The model specification was examined in the Autoregressive Distributed Lag (ARDL) framework and the results revealed the existence of a long-run equilibrium. The findings indicated that financial development and economic growth cause a demand for energy to escalate in the long run. The Toda-Yamamoto (TYDL) non Granger-causality test provides evidence that there is unidirectional Granger-causality running from financial development and economic growth to energy consumption in the long run. This suggests that Malaysia is not an energy-dependent country. Hence, the government could implement energy conservation policies to reduce the waste of energy use. Given that development in the financial sector, and economic growth increase petroleum consumption in Malaysia, the policies pertaining to energy consumption should incorporate the development of the financial sector and economic growth of country. Keywords: Petroleum consumption, financial development, non-renewable energy, Autoregressive Distributed Lag (ARDL), Toda-Yamamoto (TYDL) non Granger-causality test

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Causality Between Public Debt, Public Debt Service and Economic Growth in an Emerging Economy

Studia Universitatis Babe-Bolyai Oeconomica ◽

10.2478/subboec-2020-0001 ◽

2020 ◽

Vol 65 (1) ◽

pp. 1-19

Author(s):

Talknice Saungweme ◽

Nicholas M. Odhiambo

Keyword(s):

Economic Growth ◽

South Africa ◽

Public Debt ◽

Debt Service ◽

Bounds Testing ◽

Causality Test ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run

AbstractThis paper explores the causality between public debt, public debt service and economic growth in South Africa covering the period 1970 – 2017. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and the multivariate Granger-causality test. The empirical results indicate that there is unidirectional causality from economic growth to public debt, but only in the short run. However, the study fails to establish any causality between public debt service and economic growth, both in the short run and long run. In line with the empirical evidence, the study concludes that it is economic growth that drives public debt in South Africa, and that the causal relationship between public debt and economic growth is sensitive to the timeframe considered. The paper recommends policymakers in South Africa to consider growth-enhancing policies in the short run, since poor economic performances may lead to high public debt levels.

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The Causal Relationship between Energy Consumption, CO2 Emission, Population Growth and Economic Growth in South Africa: A Multivariate Investigation

10.47363/jesmr/2020(1)110 ◽

2020 ◽

pp. 1-5

Author(s):

Erasmus L Owusu ◽

Keyword(s):

Economic Growth ◽

South Africa ◽

Energy Consumption ◽

Population Growth ◽

Causal Relationship ◽

Co2 Emission ◽

Electricity Consumption ◽

Electricity Production ◽

Bounds Testing ◽

Long Run

The paper empirically examines the short and long-run causal relationship between energy consumption, CO2 emission, population growth and economic growth in South Africa. In so doing, the paper employs multivariate Granger-Causality within an ARDL-bounds testing approach to co-integration and unrestricted error correction model (UECM). The paper finds that energy usage and electricity consumption cause economic growth in South Africa but only in the short run. Additionally, the paper finds that, economic growth, population growth and energy consumption cause CO2 emission. Thus, policies should be targeted at the expansion of renewable and efficient electricity production in order to cope with the expected demand from expected population growth and from increasing demand from industries in order to maintain sustainable economic growth

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Relationships between Financial Development, Trade Openness, and Economic Growth

Regional Economic Integration and the Global Financial System - Advances in Finance, Accounting, and Economics ◽

10.4018/978-1-4666-7308-3.ch015 ◽

2015 ◽

pp. 183-196

Author(s):

Fahri Seker ◽

Murat Cetin ◽

Birol Topcu ◽

Gamze Yıldız Seren

Keyword(s):

Economic Growth ◽

Granger Causality ◽

Financial Development ◽

Trade Openness ◽

Granger Causality Test ◽

Bounds Testing ◽

Causality Test ◽

Vector Error Correction ◽

Long Run ◽

Short Run

The aim of this chapter is to investigate the cointegration and causal relationship between financial development, trade openness, and economic growth in Turkey for the period of 1980-2012. To analyze the data, the bounds testing and Johansen-Juselius approaches to cointegration and Granger causality test based on vector error-correction model are employed. The cointegration tests suggest that there is a long-run relationship between the variables. The Granger causality test reveals long-run bidirectional causality between trade openness and economic growth. The findings also indicate unidirectional causality running from financial development to trade openness and economic growth in the long run as well as a bi-directional causality between financial development and economic growth in the short run. The results support supply-leading and trade-led growth hypotheses. Therefore, it can be suggested that Turkey can accelerate its economic growth by improving its financial systems and encouraging foreign trade.

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Causality between Energy Consumption and Economic Growth: The Case of Pakistan

THE LAHORE JOURNAL OF ECONOMICS ◽

10.35536/lje.2008.v13.i2.a3 ◽

2008 ◽

Vol 13 (2) ◽

pp. 45-58 ◽

Cited By ~ 25

Author(s):

Qazi Muhammad Adnan Hye ◽

Sana Riaz

Keyword(s):

Economic Growth ◽

Energy Consumption ◽

Annual Data ◽

Energy Prices ◽

Bounds Testing ◽

Causality Test ◽

Long Run ◽

Negative Effect ◽

Short Run ◽

The Cost

This study seeks to determine the direction of causality between energy consumption (EC) and economic growth (EG), using annual data from 1971 to 2007. In our empirical analysis, we implement a bounds-testing approach to co-integration and an augmented form of the Granger causality test to identify the direction of the relationship between these variables both in the short and long run. Our findings suggest bidirectional causality between EG and EC in the short run; in the long run we find unidirectional causality from EG to EC. EC does not lead to EG in the long run because higher energy prices (oil prices) increase the cost of business, leading to a negative effect on EG. Additionally, when energy prices fluctuate, they create uncertainty that also affects economic growth. The study recommends direct investment in local energy resources.

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Economic Growth And Carbon Emissions In South Africa: An Empirical Investigation

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v28i1.6682 ◽

2011 ◽

Vol 28 (1) ◽

pp. 37 ◽

Cited By ~ 16

Author(s):

Nicholas M. Odhiambo

Keyword(s):

Economic Growth ◽

South Africa ◽

Energy Consumption ◽

Carbon Emissions ◽

Empirical Investigation ◽

Output Growth ◽

Font Size ◽

Bounds Testing ◽

Conservation Policies ◽

Long Run

In this paper we examine the causal relationship between CO2 emissions and economic growth in South Africa - using the newly developed ARDL-Bounds testing approach. We incorporate energy consumption in a bivariate causality setting between CO2 emissions and economic growth, thereby creating a simple trivariate model. Our empirical results show that there is a distinct unidirectional causal flow from economic growth to carbon emissions in South Africa. We also find that energy consumption Granger-causes both carbon emissions and economic growth. We recommend that energy conservation policies, as well as appropriate forms of renewable energy, should be explored in South Africa in order to enable the country to reduce its carbon emission footprint without necessarily sacrificing its output growth. The results apply irrespective of whether the causality is estimated in the short or in the long run.

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