Influence of financial development on energy intensity subject to technological innovation: Evidence from panel threshold regression

Controlling energy intensity has become a prime objective of present time as energy consumption is the main source of about three-fourth of the world's green house gas emissions. Therefore, scholars have been trying to detect the ways that can ensure efficient utilization of energy with minimal degradation of environment. Consequently, studies have been conducted to explore the linkages between financial development and energy consumption to see whether financial development can help reduce energy intensity. Nonetheless, this study considers technological innovation as a crucial dimension of socioeconomic changes and explores the technology dependency of the influence of financial development on energy intensity. To do so, a panel threshold regression model is applied in a panel of 23 European Union (EU) countries. The results corroborate that the inhibiting effects of banking sector development, stock market development and overall financial development on energy intensity depend on the levels of technological innovation. Thus, policymakers need to consider the matter carefully when they devise policy decisions. (C) 2021 Elsevier Ltd. All rights reserved.

Automated summary

This study examines the impact of financial development on energy intensity, highlighting the dependence of financial development on technological innovation levels, which policymakers should carefully consider in policy decisions.