Petroleum Consumption and Financial Development: Evidence from Selected EMEs: Panel ARDL-PMG Approach

This paper examines the long-term and causal relationship between petroleum consumption and financial development in selected emerging market economies (EMEs) from 2000 to 2020. Using panel cointegration and an error correction model (ECM), the study captures both the short- and long-run dynamics of the petroleum–finance nexus while accounting for cross-country heterogeneity. The results show a significant long-run elasticity of petroleum consumption with respect to financial development, while the error correction term confirms robust convergence to equilibrium. In contrast, the short-run effects are insignificant, indicating that petroleum consumption does not immediately influence financial development. These findings highlight the need for robust energy policies that strengthen financial markets and support sustainable growth. Policymakers should prioritize infrastructure investments, strengthen financial linkages in the energy sector, and promote diversification to reduce the risks associated with petroleum dependence.