Thesis Public Defense | VNP25 - Trịnh Quốc Minh

Financial development and energy consumption: Which causes which in the Asia Pacific region?

Student: Trịnh Quốc Minh, VNP 25

Supervisor: Dr. Võ Hồng Đức

Abstract:

The Asia Pacific region has been playing an essential role in global economic growth. Among other factors, financial development, accounting 37 percent of global banking profit, has played a crucial role in this economic growth. Also, in supporting this economic growth, energy consumption from the region accounted for more than half of global energy demand in 2016. While the nexuses between finance–growth and between energy–growth have been widely conducted, the inter–relationship between financial development and energy consumption appears to be underexamined in current empirical analyses, in particular for the Asia Pacific region. This study aims to examine the long–term impact of financial development on energy consumption and their Granger causality based on the sample of 21 Asia Pacific countries during the 1990–2019 period. The long–run estimator –the fully modified ordinary least squares, is utilized in this paper. Various indicators are used as the proxies for financial development to ensure the robustness of the findings. We find significant evidence on the positive long–run effect of financial development on energy consumption. In addition, a bi–directional Granger causality between financial development and energy consumption is found. Various policy implications have emerged based on the empirical findings of this paper.

Keywords: CAPM, multi factor asset pricing models, utilities, ASEAN 5, quantile regression, Risk–Return framework.