Abstract:

This study tries to analyze the causal relationship between financial development and energy consumption for Turkey. Data set covering the period of 1960-2011 was used.. As financial development indicators, bank deposits and bank loans are used. In addition, per capita income which affects positively or negatively the financial development indicators and energy consumption is included in data set. As energy consumption data, energy consumption for per capita is employed.  Johansen co-integration test and VAR Granger causality analysis has been employed in the study. According to one of the the results, there is no correlation between financial development and energy consumption in the long term. Other result says that there is a dual casuality between bank deposits, which is an indicator of financial development, and energy consumption in the short run. An increase in bank deposits raises energy consumption and a decrease in bank deposits reduces energy consumption.  Likewise, while energy consumption contributes an increase in bank deposits, reduction of energy consumption will lead to a reduction in bank deposits

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