A Study of the Impact of Energy Consumption on Financial Development in the Selected MENA Countries: A Dynamic Panel Data Analysis

This study investigated the effect of energy consumption on financial development in 11 MENA (Middle East and North of Africa) countries. The stock market data were used for representing financial development. The period covered by the study was from 2004 to 2011 and a dynamic panel data analysis based on GMM model was applied. In this paper, financial development indicators included only part of the capital market, the stocks traded total value and stocks traded turnover ratio. In order to further understand the details, a separate analysis was conducted on financial development indicators. The empirical findings revealed the positive and significant effect of energy consumption on the stock market; thus, greater energy consumption led to an increase in stock market. However, Carbon dioxide as well as other independent variables represented a significant and negative impact on the stock market. The used models were expressed in logarithmic form, thus allowing examination of the models also providing the necessary traction.