IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i19p8360-d1486028.html
   My bibliography  Save this article

Effects of Energy Consumption, GDP and Microfinance on Sustainable Poverty Reduction: Evidence from a Developing Economy

Author

Listed:
  • Md. Sarowar Khaled

    (Department of Mechanical and Mechatronics Engineering, Faculty of Engineering, Prince of Songkla University, Hat Yai 90112, Songkhla, Thailand)

  • Kittinan Maliwan

    (Department of Mechanical and Mechatronics Engineering, Faculty of Engineering, Prince of Songkla University, Hat Yai 90112, Songkhla, Thailand)

  • Juntakan Taweekun

    (Department of Mechanical and Mechatronics Engineering, Faculty of Engineering, Prince of Songkla University, Hat Yai 90112, Songkhla, Thailand)

  • Abul K. Azad

    (Faculty of Integrated Technologies, Universiti Brunei Darussalam, Jalan Tungku Link, Bandar Seri Begawan BE 1410, Brunei)

  • K. M. Zahidul Islam

    (Institute of Business Administration, Jahangirnagar University, Savar 1342, Dhaka, Bangladesh)

Abstract

This study examines the combined and individual effects of gross domestic product (GDP), microfinance loan disbursement, per capita power consumption, and total energy consumption on poverty rate in Bangladesh by using annual time series data over the period of 1995–2022. This study determines the direction of causality by applying the Toda–Yamamoto (T–Y) procedure of the Granger causality test in the vector auto regression (VAR) model given the presence of a mixed order of integration of I(1) and I(2). The results of the stationary tests show that all variables except poverty rate are stationary at the I(1) order of integration, according to both the augmented Dicky–Fuller (ADF) and Phillips–Perron (PP) methods, while the poverty rate shows stationarity at the I(2) order in both methods. The T–Y empirical test result shows that the four independent variables combined affect the poverty rate significantly. Power consumption affects both GDP and microfinance and they have bi-directional causality relationship with each other. Our study shows that GDP and total energy consumption individually contribute to poverty reduction. Based on the findings, it is imperative that national policy makers place a greater emphasis on increased domestic production and the proper utilization of power and energy to reduce poverty rates. Policy implications may include strategies to promote sustainable energy development, improve energy efficiency, and provide equitable access to energy services.

Suggested Citation

  • Md. Sarowar Khaled & Kittinan Maliwan & Juntakan Taweekun & Abul K. Azad & K. M. Zahidul Islam, 2024. "Effects of Energy Consumption, GDP and Microfinance on Sustainable Poverty Reduction: Evidence from a Developing Economy," Sustainability, MDPI, vol. 16(19), pages 1-20, September.
  • Handle: RePEc:gam:jsusta:v:16:y:2024:i:19:p:8360-:d:1486028
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/19/8360/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/16/19/8360/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    2. Collin Chikwira & Edson Vengesai & Petronella Mandude, 2022. "The Impact of Microfinance Institutions on Poverty Alleviation," JRFM, MDPI, vol. 15(9), pages 1-13, September.
    3. Beatriz Armendáriz & Jonathan Morduch, 2010. "The Economics of Microfinance, Second Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262014106, April.
    4. Yessengali Oskenbayev & Murat Issabayev, 2018. "The Impact of Financial Development on Energy Demand in Transition Economies," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 18(3), pages 1-11, September.
    5. Md Arif Hasan & Kh Md Nahiduzzaman & Adel S. Aldosary & Kasun Hewage & Rehan Sadiq, 2022. "Nexus of economic growth, energy consumption, FDI and emissions: a tale of Bangladesh," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(5), pages 6327-6348, May.
    6. Shahidur R. Khandker, 2005. "Microfinance and Poverty: Evidence Using Panel Data from Bangladesh," The World Bank Economic Review, World Bank, vol. 19(2), pages 263-286.
    7. Oskenbayev Yessengali & Issabayev Murat, 2018. "The Impact of Financial Development on Energy Demand in Transition Economies," Global Economy Journal, De Gruyter, vol. 18(3), pages 1-11, September.
    8. Raihan, Selim & Osmani, S.R. & Khalily, M.A. Baqui, 2017. "The macro impact of microfinance in Bangladesh: A CGE analysis," Economic Modelling, Elsevier, vol. 62(C), pages 1-15.
    9. Sen, Kanchan Kumar & Karmaker, Shamal Chandra & Hosan, Shahadat & Chapman, Andrew J. & Uddin, Md Kamal & Saha, Bidyut Baran, 2023. "Energy poverty alleviation through financial inclusion: Role of gender in Bangladesh," Energy, Elsevier, vol. 282(C).
    10. Lee, Chien-Chiang & Chang, Chun-Ping, 2008. "Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data," Resource and Energy Economics, Elsevier, vol. 30(1), pages 50-65, January.
    11. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    12. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    13. Halkos, George E. & Aslanidis, Panagiotis – Stavros C., 2023. "Sustainable energy development in an era of geopolitical multi-crisis. Applying productivity indices within institutional framework," Resources Policy, Elsevier, vol. 85(PB).
    14. Raihan, Selim & Osmani, S. R. & Khalily, M. A. Baqui, 2017. "The Macro Impact of Microfinance in Bangladesh: A CGE Analysis," Conference papers 332868, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Wei & Yang, Shuyun, 2013. "The influence of energy consumption of China on its real GDP from aggregated and disaggregated viewpoints," Energy Policy, Elsevier, vol. 57(C), pages 76-81.
    2. Costantini, Valeria & Martini, Chiara, 2010. "The causality between energy consumption and economic growth: A multi-sectoral analysis using non-stationary cointegrated panel data," Energy Economics, Elsevier, vol. 32(3), pages 591-603, May.
    3. Peter Quartey, 2005. "Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana," WIDER Working Paper Series RP2005-71, World Institute for Development Economic Research (UNU-WIDER).
    4. Naser, Hanan, 2014. "On the cointegration and causality between Oil market, Nuclear Energy Consumption, and Economic Growth: Evidence from Developed Countries," MPRA Paper 65252, University Library of Munich, Germany, revised 25 Mar 2015.
    5. Dioum, Sokhna Bousso, 2024. "Pauvreté et microfinance dans l’espace de la CEDEAO : un cluster macroéconomique appliqué [Poverty and microfinance in the ECOWAS region: an applied macroeconomic cluster]," MPRA Paper 121581, University Library of Munich, Germany.
    6. Khan, Rana Ejaz Ali & Sattar, Rashid, 2010. "Trade, Growth and Povety: A Case of Pakistan," MPRA Paper 20904, University Library of Munich, Germany.
    7. Shyh-Wei Chen & Zixiong Xie & Ying Liao, 2018. "Energy consumption promotes economic growth or economic growth causes energy use in China? A panel data analysis," Empirical Economics, Springer, vol. 55(3), pages 1019-1043, November.
    8. Nicolaas Groenewold & James E.H. Paterson, 2013. "Stock Prices and Exchange Rates in Australia: Are Commodity Prices the Missing Link?," Australian Economic Papers, Wiley Blackwell, vol. 52(3-4), pages 159-170, December.
    9. Jaganath Behera, 2015. "Examined the Energy-Led Growth Hypothesis in India: Evidence from Time Series Analysis," Energy Economics Letters, Asian Economic and Social Society, vol. 2(4), pages 46-56, December.
    10. Ahmad, Nisar & Aghdam, Reza FathollahZadeh & Butt, Irfan & Naveed, Amjad, 2020. "Citation-based systematic literature review of energy-growth nexus: An overview of the field and content analysis of the top 50 influential papers," Energy Economics, Elsevier, vol. 86(C).
    11. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    12. Dioum, Sokhna Bousso, 2024. "Pauvreté et microfinance dans l’espace de la cedeao: un cluster macroéconomique appliqué [Poverty and microfinance in the ecowas region: an applied macroeconomic cluster]," MPRA Paper 121580, University Library of Munich, Germany.
    13. Liu, Yaping & Sadiq, Farah & Ali, Wajahat & Kumail, Tafazal, 2022. "Does tourism development, energy consumption, trade openness and economic growth matters for ecological footprint: Testing the Environmental Kuznets Curve and pollution haven hypothesis for Pakistan," Energy, Elsevier, vol. 245(C).
    14. Nyakabawo, Wendy & Miller, Stephen M. & Balcilar, Mehmet & Das, Sonali & Gupta, Rangan, 2015. "Temporal causality between house prices and output in the US: A bootstrap rolling-window approach," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 55-73.
    15. Erida Curraj, 2019. "Vintage Design Furniture in Albania, a New Retro Design Paradigm in the Post-Communist Era," European Journal of Engineering and Formal Sciences Articles, Revistia Research and Publishing, vol. 2, ejef_19.
    16. Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "Causality Between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 269-289, January.
    17. Gerard Bikorimana & Charles Rutikanga & Didier Mwizerwa, 2020. "Linking energy consumption with economic growth: Rwanda as a case study," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2020(2), pages 181-200.
    18. Bashiri Behmiri, Niaz & Pires Manso, José R., 2012. "Does Portuguese economy support crude oil conservation hypothesis?," Energy Policy, Elsevier, vol. 45(C), pages 628-634.
    19. Katsoulacos Yannis & Konstantakopoulou Ioanna & Metsiou Eleni & Tsionas Efthymios, 2014. "Quantitative Price Tests in Antitrust Market Definition with an Application to the Savory Snacks Markets," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 12(1), pages 1-33, January.
    20. Islam, Asadul & Nguyen, Chau & Smyth, Russell, 2015. "Does microfinance change informal lending in village economies? Evidence from Bangladesh," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 141-156.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:19:p:8360-:d:1486028. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.