The Impact of Energy Consumption on Financial Development in Nigeria

Abstract

This study is aimed at examining the impact of energy consumption on financial development in Nigeria. The study covers the period of 36 years (1980 – 2016). Model was formulated and data were analyzed using Augmented Dickey Fuller unit root test, co-integration and error correction model. The dependent variable for the study was financial development (FD), while the explanatory variables were crude oil consumption (COC), coal consumption (CC) and electricity consumption (EC). The empirical
findings of the study reveals that crude oil consumption has positive and significant impact on financial development. It was also established that coal consumption has positive and significant impact on financial development while electricity consumption has negative and significant impact on financial development. The study concluded that energy consumption has impact on financial development in Nigeria at long run. The study recommends among others that Government and other stakeholders need to evolve policies that will enhance and engender the transmission of the developments in the Nigerian
financial sector into level of consumption of energy in the economy.