Financial Development and Energy Consumption Nexus in Nigeria

This paper re-examines the link between financial development and energy consumption in Nigeria both in the long run and the short run. Earlier study reported a negative relationship between financial development and energy consumption in Nigeria which is quite contrary to theoretical expectation and findings for developed and developing economies. The study employed the ARDL Bounds cointegration approach and a sample period of 1971-2014. A significant long-run relationship was confirmed between financial development and energy consumption in Nigeria. It was also deduced that the development of the financial sector exerted positively and significantly on energy demand in the Nigerian economy, both in the short-run and the long-run periods. It is evident that policies aimed at developing the financial sector have direct and far-reaching implications on energy demand in Nigeria. The paper vividly revealed how development in the Nigerian financial sector exerted on energy demand over a period of 40 years