The Nexus between Financial Development, Economic Growth and Energy Consumption in India: A VECM Technique

Published On: 2020-12-16 08:51:57

Price: ₹ 500

Author: Amandeep Verma

Author Address: Department of Economics, Government College of Commerce and Business Administration Sector 50 Chandigarh-160047

Keywords: Economic growth, energy consumption, financial development, vector error correction model.

JEL Codes: Q40, D53, O43, C80.


The demand for energy consumption requires efficient financial development in terms of bank credit. Therefore, this study examines the nexus between Financial Development, Economic Growth, Energy Prices, and Energy Consumption in India, utilizing Vector Error Correction Model (VECM) technique to determine the nature of short and long-term relationships from 2010 to 2019. The estimation of results indicates that a one percent increase in bank credits to private sector results in 0.10 percent increase in energy consumption and 0.28 percent increase in energy consumption responses to 1 percent increase in economic growth. It is also observed that the impact of energy price proxied by consumer price index is statistically significant with a negative sign indicating the consistency with the theory.


Indian Journal of Economics and Development
Volume 16 No. 4, 2020, 606-612
Indexed in Clarivate Analytics (ESCI) of WoS
Scopus: Title Accepted 
NAAS Score: 4.82