Financial sector development and energy poverty: empirical evidence from developing countries

Abstract

This study empirically assesses the significance of financial sector development in determining the energy poverty of developing countries. The study utilizes a sample of 110 developing economies over a period ranging from 1990 to 2020. The analysis is based on the traditional econometric techniques comprising pooled OLS, fixed-effects, and random-effects and Driscoll and Kraay's robust standard error approach for pooled OLS, fixed effects, and random effects. To account for a possible endogeneity problem, the study also uses the system GMM model. Our empirical outcomes verify a positive role of financial sector development in alleviating energy poverty of the sample economies. The findings also provide a supportive role of output growth, foreign direct investment, and urbanization in helping accessibility to energy services. These outcomes have strong policy implications for developing economies.

Keywords: Developing economies; Energy poverty; Financial development.