Energy-Finance Nexus: Evidence from African Oil Exporting Countries

Zunaidah Sulong, Ibrahim Sambo Farouq

Abstract


The focus of this study is to examine the effect of energy consumption, energy intensity, energy prices on the financial development of some selected top oil exporting countries in Africa. The study takes the period from 1976 until 2019 for the analysis. Both the cross-sectional and the homogeneity tests confirmed the presence of cross-sectional dependency and heterogeneity across the panel data set. Likewise, the dynamic and heterogeneous co-integration result reveals the presence of long run relationship among the scrutinized variables. The estimation result further indicates that both the energy intensity and energy use positively relate with the financial development of the sampled economies, while energy price indicates a negative relationship towards financial development. In addition, the causality results by Dumitrescu and Hurlin causality shows a uni-directional causal relationship from energy use to financial development. It also indicates another one-way causal linkage from energy intensity to financial development. Meanwhile, there exists a feedback causal effect between energy price and the financial development for all the sampled economies. In the last section of the paper, the analysis makes available policy recommendations.

Keywords


energy intensity; energy price; financial development; Dumitrescu and Hurlin

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References


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