Environmental Science and Pollution Research

, Volume 26, Issue 9, pp 8838–8846 | Cite as

Modeling the non-linear relationship between financial development and energy consumption: statistical experience from OECD countries

  • Muhammad Awais Baloch
  • Danish
  • Fanchen MengEmail author
Research Article


The linkage between financial development and energy consumption is widely investigated in the literature. However, the non-linear relationship between financial development and energy demand is still under debate. Therefore, this study aims to examine the non-linear relationship between financial development, economic growth, and energy consumption in OECD countries. The study uses the Driscoll–Kraay standard errors panel regression model for spanning from 1980 to 2016. The empirical findings indicate that an inverted U-shape relationship exists between financial development and energy consumption as well as between economic growth and energy consumption. Moreover, the feedback hypothesis is found between financial development and energy use. Additionally, income and energy use granger cause each other. The innovative findings contribute to extant literature, which is of special interest to the country’s policymakers regarding energy efficiency.


Financial development Energy consumption Non-linear relationship OECD countries 



The authors want to say thanks to the Editor, Dr. Philippe Garrigues, as well as four referees for giving valuable suggestions, which substantially improved this study. Muhammad Awais Baloch and Danish contributed equally to this study and shared the first authorship. The usual disclaimer applies.

Funding information

This study is supported by Humanities and Social Science Fund of Ministry of Education of China (Reference No. 17YJAC30072).


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.School of Economics and ManagementBaoji University of Arts And SciencesBaojiChina
  2. 2.School of Economics and TradeGuangdong University of Foreign StudiesGuangzhouChina
  3. 3.School of Management and EconomicsBeijing Institute of TechnologyBeijingChina

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