Petroleum Consumption and Financial Development in Malaysia

Authors

  • Jen-Eem Chen Fakulti Pengurusan PerniagaanUniversiti Teknologi Mara, Malaysia
  • Yan-Ling Tan University Technology MARA Johor Branch, Malaysia
  • Chin-Yu Lee Faculty of Business and Finance Universiti Tunku Abdul Rahman, Malaysia
  • Lim-Thye Goh Faculty of Economic and Management Universiti Putra Malaysia, Malaysia

DOI:

https://doi.org/10.32890/ijms2016.23.2.3

Keywords:

Petroleum consumption, financial development, non-renewable energy, Autoregressive Distributed Lag (ARDL), Toda-Yamamoto (TYDL) non Granger-causality test

Abstract

This paper aims to contribute to the existing literature by examining the dynamic relationship among petroleum consumption, financial development, economic growth and energy price. The sample of this study is based on the Malaysian annual data from 1980 to 2010. The model specification was examined in the Autoregressive Distributed Lag (ARDL) framework and the results revealed the existence of a long-run equilibrium. The findings indicated that financial development and economic growth cause a demand for energy to escalate in the long run. The Toda-Yamamoto (TYDL) non Granger-causality test provides evidence that there is unidirectional Granger-causality running from financial development and economic growth to energy consumption in the long run. This suggests that Malaysia is not an energy-dependent country. Hence, the government could implement energy conservation policies to reduce the waste of energy use. Given that development in the financial sector, and economic growth increase petroleum consumption in Malaysia, the policies pertaining to energy consumption should incorporate the development of the financial sector and economic growth of country.
 
Keywords: Petroleum consumption, financial development, non-renewable energy, Autoregressive Distributed Lag (ARDL), Toda-Yamamoto (TYDL) non Granger-causality test

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Published

29-12-2016

Issue

Vol. 23 No. 2 (2016): International Journal of Management Studies (IJMS) Vol. 23, No. 2 Dec 2016

Section

Articles

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Harvested 2026-09-15
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Identifiers DOI 10.32890/ijms2016.23.2.3