Do financial development, trade openness, and institutional quality matter for energy consumption in Central Asia?

This study aims to provide valuable information on which factors are determinant for energy consumption in the long term. In this respect, the study investigates the impact of financial development, trade openness, and institutional quality on energy consumption for Central Asia which comprises Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. The analysis covers 1996–2014 period and political stability and absence of violence is included as institutional quality indicator as described by the World Bank. To test this relationship, the method employed is static panel data analysis. Empirical results show that financial development and trade openness positively affect energy consumption in these countries. In addition, institutional quality also has positive and significant effect on energy consumption. Based on this finding, policymakers are advised to invest in renewable energy sources given the energy needs and recommended to ensure that energy policy stringency is provided, leading to increasing institutional quality.