Abstract
The current study analyzes the time–frequency dependencies between financial development (FD) and electrical power consumption (EPC) in the Gulf Cooperation Council (GCC) Countries (Qatar, Saudi Arabia, Kuwait, the United Arab Emirates, Oman, and Bahrain) during the period 1980–2017. The practical examination is based on the wavelet squared coherence that allows assessing the co-movement between the selected variables of FD and EPC. The main objective of this study is to investigate the short- and long-term dependencies between FD for the GCC countries and EPC to provide helpful insights to policy makers, investors, and government to show them if FD is influenced by EPC in GCC countries. Most of previous related studies have employed co-integration, causality, and panel data techniques. However, this study will be the first study that uses the wavelet coherence analysis to examine the relationship between EPC and FD. The results show periodic changes in the model of the co-movements especially after 2008 for all countries at comparatively high frequencies. Besides, the results indicate strength of co-movement varies by country. Such as a high degree of co-movement between the electrical power consumption and financial development in United Arab Emirates, Kingdom of Saudi Arabia, and Qatar, while low co-movement with Kuwait and Bahrain. The result as well document a comprehensive change in electrical power consumption and financial development co-movement after 2008 at comparatively low frequencies especially in Kuwait, Oman, and Bahrain. The results of the current study provide prospective importance implications for policy makers in improving energy plans for GCC countries that redound to EPC depression policies whereas conserving financial development.
Highlights
Various researches have investigated the relationship between electrical power consumption (EPC) and financial development (FD), precisely in the recent three decades in various countries for instance [6, 11, 26, 29, 37, 42, 44, 50]
Salahuddin et al [42] found significant and negative association between EPC and FD, and this indicates that EPC and Gross domestic product (GDP) prompt C O2 emissions for Gulf Cooperation Council (GCC), while FD decrease it
The results indicated a long-run and causal relationships among FD, GDP, CO2, and energy consumption for all GCC nations with the exception of United Arab Emirates (UAE)
Summary
Various researches have investigated the relationship between electrical power consumption (EPC) and financial development (FD), precisely in the recent three decades in various countries for instance [6, 11, 26, 29, 37, 42, 44, 50]. Numerous previous studies presented a robust relationship between the EPC, economic growth, and FD. This suggests that a rise in EPC immediately influences FD and economic growth (see [4, 16, 22, 24, 25, 42, 45, 46]). Neutral causality relationship between financial development and C O2 emissions is found by this study. It is very important for different parties such as for government to test the causality direction to construct and apply implications for electricity policies. It is essential to attain whether there is an existence of causality relationship between FD and EPC with its direction
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