Linear and non-linear impact of Internet usage and financial deepening on electricity consumption for Turkey: empirical evidence from asymmetric causality

Research Article

Abstract

This study investigates the relationship between Internet usage, financial development, economic growth, capital and electricity consumption using quarterly data from 1993Q1 to 2014Q4. The integration order of the series is analysed using the structural break unit root test. The ARDL bounds test for cointegration in addition to the Bayer–Hanck (2013) combined cointegration test is applied to analyse the existence of cointegration among the variables. The study found strong evidence of a long-run relationship between the variables. The long-run results under the ARDL framework confirm the existence of an inverted U-shaped relationship between financial development and electricity consumption, not only in the long-run, but also in the short-run. The study also confirms the existence of a U-shaped relationship between Internet usage and electricity consumption; however, the effect is insignificant. Additionally, the influence of trade, capital and economic growth is examined in both the long run and short run (ARDL-ECM). Finally, the results of asymmetric causality suggest a positive shock in electricity consumption that has a positive causal impact on Internet usage. The authors recommend that the Turkish Government should direct financial institutions to moderate the investment in the ICT sector by advancing credits at lower cost for purchasing energy-efficient technologies. In doing so, the Turkish Government can increase productivity in order to achieve sustainable growth, while simultaneously reducing emissions to improve environmental quality.

Keywords

ARDL Combine cointegration Asymmetric causality Internet usage Financial deepening 

Notes

Acknowledgements

We thank the Editor, and anonymous reviewers for their useful comments and suggestions. Furthermore, this research was completed with the support of scientific research project unit, Near East University, North Cyprus with a project number SOS-2017-2-009.

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© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Banking and FinanceNear East UniversityNorth Cyprus Mersin 10Turkey
  2. 2.Institute of Business Studies and LeadershipAbdul Wali Khan UniversityMardanPakistan
  3. 3.Department of BusinessBahcesehir UniversityIstanbulTurkey

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