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Energy–Finance–Growth Nexus in ASEAN-5 Countries: An ARDL Bounds Test Approach

Author

Listed:
  • Masnun Mahi

    (Department of Finance and Banking, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur 50603, Malaysia)

  • Seuk Wai Phoong

    (Department of Operation and Management Information System, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur 50603, Malaysia)

  • Izlin Ismail

    (Department of Finance and Banking, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur 50603, Malaysia)

  • Che Ruhana Isa

    (Department of Accountancy, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur 50603, Malaysia)

Abstract

This study examines the relationship between energy consumption, financial development and economic growth for ASEAN-5 countries, namely Malaysia, Indonesia, the Philippines, Singapore and Thailand, over the period from 1980 to 2017. Finance–growth and energy–growth relationships have been well researched; however, the energy–finance–growth nexus is an equally important but less explored area. Our Auto Regressive Distributed Lags (ARDL) bounds test for cointegration results suggests that the variables tend to move together in the long run for all countries, apart from Indonesia. Our study also considers the effect of a structural break due to financial crisis and confirms that the break does not affect the long-term relationship among the variables; in other words, the financial crisis does not affect the energy–finance–growth nexus. Hence, considering the consistency of energy consumption, the importance of the energy sector must not be undermined, and appropriate energy policies are instrumental in maintaining a well-managed financial sector for sustainable economic growth.

Suggested Citation

  • Masnun Mahi & Seuk Wai Phoong & Izlin Ismail & Che Ruhana Isa, 2019. "Energy–Finance–Growth Nexus in ASEAN-5 Countries: An ARDL Bounds Test Approach," Sustainability, MDPI, vol. 12(1), pages 1-16, December.
    • Handle: RePEc:gam:jsusta:v:12:y:2019:i:1:p:5-:d:299101
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