Investigating the Nexus between Energy Consumption and Financial Development: Empirical Evidence from Argentina

This thesis investigates the relationship between energy consumption, financial development, economic growth, and urbanization in Argentina over the period 1965 2015. By analyzing the data, the research aims to provide valuable insights and recommendations for policymakers regarding the significance of financial development, economic growth, and urbanization in shaping energy consumption patterns in Argentina. The analysis conducted in this thesis revealed no significant structural breaks throughout the examined period, indicating the stability of the relationships under investigation. This finding suggests that the dynamics between energy consumption, financial development, economic growth, and urbanization have remained relatively consistent over the years in Argentina. One of the key findings of this thesis is the identification of a non-linear, inverted U shaped relationship between financial development and energy consumption. This implies that as financial development increases, energy consumption initially rises, but at a certain point, further financial development leads to diminishing returns in terms of energy consumption. This finding underscores the importance of finding an optimal level of financial development to ensure sustainable and efficient energy consumption in Argentina. Furthermore, the analysis also uncovered bidirectional causality between energy consumption and financial development. This indicates that changes in energy consumption can influence financial development, while financial development can also impact energy consumption. Similarly, bidirectional causality was observed between energy consumption and economic growth, suggesting a mutually reinforcing relationship between these variables. Keywords: Energy Consumption; Financial Development; ARDL; Argentina.