HOW DOES THE STOCK MARKET DEVELOPMENT REACT TO ENERGY CONSUMPTION? EVIDENCE FROM THE ARDL PANEL APPROACH
DOI:
https://doi.org/10.2478/eoik-2025-0006Keywords:
Saudi Arabia, development, stock market, energy con- sumption, ARDLAbstract
This article examines the relationship between stock market devel-
opment and energy consumption in the Gulf Cooperation Council
(GCC) countries using panel data from 1971-2021 and ARDL panel
and cross-section techniques. The long-term results show that market
capitalization has a significant effect on oil consumption. In contrast,
the value of shares traded positively and significantly influences the
consumption of oil and electricity. Short-term findings indicate that
the overall size of the stock market does not significantly affect elec-
tricity usage. This suggests that achieving the desired energy-saving
goals may require policies that account for the influence of stock mar-
ket on energy demand, rather than excluding this factor. Given these
findings, policymakers in GCC countries should take into account the
intricate and various effects that stock market development have on
energy consumption. Accordingly, to reduce energy consumption,
policies should not solely focus on energy demand and income re-
lationships. Instead, policies should encourage improved corporate
governance practices that incentivize companies to reduce their ener-
gy consumption to improve their financial performance and increase
their share prices. This can be achieved by encouraging companies to
invest in energy-efficient technologies and reducing their reliance on
energy-intensive projects. Additionally, policymakers should consider
regulating the stock market to promote environmentally responsible
investments and reduce the financing of energy-intensive projects.
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