Journal of Environmental Management 285 (2021) 112208

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Journal of Environmental Management

journal homepage: http://www.elsevier.com/locate/jenvman

Research article

The role of financial development, R&D expenditure, globalization and

institutional quality in energy consumption in India: New evidence from
the QARDL approach
Danish Iqbal Godil a, Arshian Sharif b, c, Muhammad Iftikhar Ali d, Ilhan Ozturk e, f, g, *,
Rimsha Usman a
a
Bahria University Karachi Campus, Pakistan
b
Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Sintok, Malaysia
c
Faculty of Management Sciences, Department of Business Administration, Ilma University Karachi, Pakistan, Karachi, Pakistan
d
Bahria University Islamabad, Pakistan
e
Faculty of Economics and Administrative Sciences, Cag University, Mersin, Turkey
f
Department of Medical Research, China Medical University Hospital, China Medical University, Taichung, Taiwan
g
Department of Finance, Asia University 500, Lioufeng Rd., Wufeng, Taichung 41354, Taiwan

A R T I C L E I N F O A B S T R A C T

Keywords: The aim of this research is to explore the association between financial development, research and development
R&D expenditure (R&D) expenditures, globalization, institutional quality, and energy consumption in India by using the quarterly
Institutional quality data of 1995–2018. Quantile Autoregressive Distributed Lag (QARDL) approach is employed to examine the
Energy consumption
relationship. An application of the QARDL approach suggests that the R&D, financial development, globalization,
Globalization
and institutional quality significantly influence energy utilization in India. R&D and institutional quality have a
Financial development
India negative effect on energy utilization which shows that due to the increase in the quality of institutions and R&D
in the country, energy utilization is likely to decrease. However, globalization and financial performance have a
positive influence on energy which depicts that due to the increase in financial performance and globalization in
India the energy consumption is likely to increase. According to the outcomes of this research, India should make
a policy to ease the penalties of energy utilization by monitoring resource transfer by means of globalization and
by implementing energy conversation procedures through the advancement of the financial sector.

1. Introduction enhancement in the financial development of the countries are backed

by the phenomenon of globalization (Saud et al., 2018). Similarly,
The effect of energy consumption is country-specific and depends institutional quality influences the country’s quality of the environment
upon various driving forces. For e.g. in the developing economies, and may increase or decrease energy consumption (Hosseini et al.,
financial assistance facilitates individual consumers and businesses to 2013). So considering these important factors the current research aims
expand their purchases of products and services; hence there is a direct to contribute to the present literature by exploring the nexus between
upsurge in the need for energy at individual and business operation financial development, R&D expenditures, globalization, institutional
levels due to the construction and management of new infrastructure quality, and energy consumption in India.
(Sadorsky, 2010). Further, R&D expenses play a significant role in the In the twenty-first century, competitive circumstances have changed
shift of the energy economy. At the global level, every individual the dynamics of the world’s economy. Higher economic development
country is forced by the external environment for R&D expenses to has influenced the increasing demand for energy (Rafindadi, 2015). In
enhance the scope of new energy technology that influences the energy 2019, the World’s real GDP has grown by 2.9% (IMF Data Mapper,
consumption (Jin and Zhang, 2016; Lee and Lee, 2013). The expansion 2020). This economic development leads towards more economic ac­
in trade activities, promotion of emerging technologies, and tivities and as a result, the demand for energy consumption is constantly

* Corresponding author. Faculty of Economics and Administrative Sciences, Cag University, Mersin, Turkey.
E-mail addresses: danishiqbal.bukc@bahria.edu.pk (D.I. Godil), arshian.aslam@gmail.com (A. Sharif), iftikhar.kfp@gmail.com (M.I. Ali), ilhanozturk@cag.edu.tr
(I. Ozturk), rimsha2k17@gmail.com (R. Usman).

https://doi.org/10.1016/j.jenvman.2021.112208
Received 7 May 2020; Received in revised form 18 October 2020; Accepted 14 February 2021
Available online 20 February 2021
0301-4797/© 2021 Elsevier Ltd. All rights reserved.
D.I. Godil et al. Journal of Environmental Management 285 (2021) 112208

rising across the globe, especially in developing countries. It was high­ According to Chang et al. (2018) institutions have also been autho­
lighted that the world’s energy consumption will grow by 50% between rized to check the application of energy-related strategies. Government
2018 and 2050 (EIA, 2019). The previous history from 2010 and future institutional quality is one of the reasons behind the variation in energy
projections until 2050 can be understood by the following graph. efficiencies across borders. According to Nishant et al. (2012), to

improve environmental performance technology is the heart of the

achievement of initiatives associated with energy. This understanding
Further according to the report China and India are the major con­ has directed towards the investment in R&D and led towards the
tributors to the increase of global energy consumption, due to being the emerging energy-efficient technologies. The phenomenon of globaliza­
fastest-growing economies during the past decades amongst non-OECD tion to make the world a single structure increases the key effect on
countries. Consequently, during this period the energy usage accounts energy (Chang et al., 2011). Furthermore, before the Industrial Revo­
for 70% in these countries. The growth in real terms depicts that India’s lution of 1890, world countries would need some energy levels. How­
share of global demand for primary energy jumps from the current 6%– ever, in recent times, the requirement for energy is growing with the
11% by 2040 (EIA, 2019). In India, the usage of primary energy shows a upsurge of globalization in terms of both energy and economy. Nowa­
growth of 156% by 2040 (Bp-Energy-Outlook-2019). Further, it was also days, world nations are associated with each other through resources
highlighted in the report that 42% of this demand will be met by coal. like gas, oil, and coal. Countries are, in close associations through energy
Moreover, by 2040 the usage of renewable energy upsurges to 300 Mtoe exchange. So, in this sense, energy can be described as an important
which is currently 20 Mtoe. It was also mentioned that although energy chunk of globalization (Kurtz et al., 2014).
consumption depends heavily on fossil fuel, India will be the world’s The current research contributes to the present literature as being the
fifth-largest nation in the consumption of renewable energy by 2035. In founding work that explores the relationship of financial development,
India, renewable energy consists of hydroelectric power, R&D expenditures, globalization, and institutional quality with energy
non-hydroelectric electricity, tides, solar, wave, wind, fuel cell, and consumption in India by using the Quantile Autoregressive Distributed
biomass, and waste. Lag (QARDL) approach. Previous studies cannot be considered conclu­
The researches on energy consumption and its factors is an emerging sive because these factors were not studied concerning energy con­
area of research over the last few years that has originated diverse sumption along with this methodology. Having the fact, this study
findings. Over the past three decades, researchers have particularly investigates the causal relationship of these variables to further recom­
studied various factors affecting energy consumption including global­ mend policy suggestions depending upon the findings. Although it is
ization (henceforward GLOBL) (Shahbaz et al., 2018), financial devel­ challenging to envisage the development of the energy consumption and
opment (hereafter FIN_DEV) (Yue et al., 2019; Rafindadi and Ozturk, its nexus with financial development, globalization, R&D expenses, and
2017a), green warehousing (Seifhashemi et al., 2018), eco-efficiency institutional quality, even so, it clarifies the operational and possible
(Caiado et al., 2017); GDP growth (Menegaki, 2014; Kouakou, 2011), approaches to support the business community and state future actions
population, carbon emission (Chen and Chen, 2017), Energy R&D in line with the true situation. Researchers in preceding studies had
(Teng, 2012; Wong et al., 2013), and institutional performance (Wu and concentrated on employing suitable methodology to address the gaps
Broadstock, 2015). but the application of QARDL distinguishes the current study from the
The factors associated with financial development, research and previous work to examine the multifaceted relationships in the energy
development expenditures (hereafter R&D), globalization, and institu­ consumption nexus. It is evident that the existing empirical studies only
tional quality (henceforth INS_QLT) may increase the level of the considered the conventional research methodologies such as to inves­
world’s economic output that may further push energy consumption to tigate the causation amongst the mentioned variables while ignoring the
the higher levels. According to Wurgler (2000), the highly advanced time horizons, whereas the current study applies a more refined and
financial structure upsurges investment in developing businesses, while suitable methodology to expand the investigation by contributing new
an underdeveloped financial structure decreases investment in declining comprehensions to the financial development, R&D expenses, global­
businesses. Hence, the role of financial development can be significant ization, institutional quality, and energy consumption nexus.
in a setting where investments in renewable energy are greatly Several questions regarding the concept of energy consumption still
motivated. need to be addressed, as highlighted by Jammazi (2012) that which is

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D.I. Godil et al. Journal of Environmental Management 285 (2021) 112208

the most dynamic method to be employed for reliable, meaningful, and networks that are influencing them. Such as energy consumption is
unbiased results. Evidently, the adoption of a standard framework may reduced by using efficient technologies on the grounds of financial
drop the actual data structures or the genuine important features development, or because of increased economic activities, energy con­
impelling financial development, R&D expenses, globalization, institu­ sumption increases ultimately (Chang, 2014; Baloch and Suad, 2018).
tional quality, and energy consumption nexus. Consequently, final pol­ One of the foremost important and significant factors in renewable
icy insinuations cannot be espoused based on incompatible and erratic energy consumption is financial sector growth. Renewable energy is
results. Such facts substantiate the selection of the QARDL approach to considered an expensive project. This requires a high initial cost, R&D
adjoin these privations of the agreement thus encircling all the stated expenses, and long-term debt payment (Sonntag-O’Brien and Usher,
gaps. The present study is to institute this method to re-examine the 2006). Katircioğlu et al. (2018) found that the economic productivity of
nexus between financial growth, R&D expenses, globalization, institu­ a nation’s financial structure is significantly influenced by financial
tional quality, and energy consumption nexus. The QARDL method development by expanding FDI, and the stock market activities. Finan­
extensively varies from the earlier methods in several ways: initially, the cial development creates opportunities for financial capital by
QARDL approach has few benefits that are absent in the ordinary model. increasing confidence for investors that further lessens financial risk and
The QARDL approach enables to test the firmness of the continuing as­ the cost of capital (Baloch et al., 2019). Financial advancement widens
sociation across the quantiles and delivers a further suitable econo­ the investment opportunities across the borders that facilitate the
metric context to inspect the associations under study. Despite the fact adoption of the latest technological energy-efficient products, as
that the linear ARDL model has few similarities with the QARDL model emphasized by Rafindadi & Yusof (2015) that financial and technolog­
but it has the superiority of familiarizing likely irregularities in the re­ ical innovations have a direct association with the growth of an econ­
action of energy consumption to the influence of financial development, omy. Such developments can affect energy consumption due to financial
R&D expenses, globalization, and institutional quality under diverse growth. The rise in the degree of consumption of energy is rooted in the
aspects. financial development that stimulates economic growth. So economic
Here, the outcomes of the study depict that due to the increase in the progress in the nation raises the standard of living after being influenced
quality of institutions and R&D in the country, energy utilization is by financial development (Danish et al., 2018a, b, c). Literature is
likely to decrease, whereas, due to the increase in financial performance evident in supplementing the opinion that financial progress results in
and globalization, the energy consumption is likely to upsurge in India. greater economic growth (Shaw, 1973). Rafindadi & Aliyu (2017) also
According to the outcomes of this research, India should make a policy found a direct nexus between financial development and the develop­
to ease the penalties of energy utilization by monitoring the transfer of ment of the economy. It is obvious from this positive opinion that the
resources through globalization and by employing energy conversation outcome of financial development is a better economic growth that
measures through the expansion of the financial sector. brings higher energy demand and consumption.
The remaining part of the paper is designed as follows; in the next Despite the fact, renewable energy has such importance; there are
section allied literature is elaborated, section 3 gives a thorough very few studies that have gauged this concept. The very first person
explanation of the QARDL method, the fourth section declares the key who explores this area empirically was Brunnschweiler (2010). In her
outcomes. Conclusively, section 5 illustrates the concluding remarks and panel of non–OCED countries she explained that there is a significant
policy statements. influence of financial sector expansion on the production of renewable
energy. It was also stated that the influence of financial growth on
2. Literature review renewable electricity use is positive in the long run. Analysis conducted
by Hassine and Harrathi (2017), confirmed the fact that there is a causal
The interface between economic activities and the usage of energy is connection between financial growth, actual GDP, and renewable en­
not a topic that has been newly explored. According to Shahbaz et al. ergy utilization for the Gulf cooperation council countries in the era of
(2017), the topic was initially explored in the 1950s by Mason (1955). It 1980–2012. Furthermore, they explored a unidirectional causality be­
was further investigated by several researchers (e.g. Schurr et al., 1960; tween the private credit sector (a proxy of financial development) and
Rasche et al., 1977) concerning the economy of the U.S. Since then, the utilization of renewable energy. Moreover, it was also identified that
various studies have been carried out for numerous countries covering there is a positive and significant nexus between the consumption of
different types of robust methods (e.g. for the UK, Humphrey et al. renewable energy and financial development. Concerning China, Lin
(1979), for Ghana, Abakah (1990), for Taiwan, Cheng et al. (1997), for et al. (2016), and Japan, Rafindadi & Ozturk (2016) found the
Pakistan, Shahbaz et al. (2010), for China, Teng et al. (2012), for co-integration between financial growth and consumption of electricity.
Lebanon, Abosedra et al. (2015), for BRICS nations, Dogan et al. (2016), A significant link between energy utilization and the growth of the
and for OECD nations, Baloach et al. (2019). economy through financial development was discovered by Lee et al.
Energy as being a scarce product is used as a contribution to almost (2008) and Karanfil (2009). In the nexus related to the consumption of
all goods and services manufactured. Many emerging economies are energy, the financial development was measured using multiple in­
developing at a rate much faster than anticipated previously. That may dicators in emerging economies and Sadorsky (2010) identified a sub­
have created a spurt in energy demand. There is a high rate of energy stantial and positive but weak influence of financial development on the
consumption in developing countries like China and India due to being requirement of energy. Shahbaz et al. (2010) also found a bidirectional
big contributors in exports, flexible regulations in the country, and an positive as well as a significant causal relationship between financial
increase in individuals’ income levels in these emerging exporting growth and energy utilization in Pakistan. Contrary to Pakistan,
economies. The growth in energy consumption is observed in Asian Malaysian financial advancement positively influences energy usage but
countries where there is a demand for strong economic growth and a unidirectional causality was found (Islam et al., 2013).
financial expansion. Concerning China, Shahbaz et al. (2013) also noted In a study, Shahbaz et al. (2012) found the co-integration between
that the usage of energy has a direct nexus with the growth of the economic growth, financial progress, and the rise in consumption of
economy. Therefore, sufficient production of energy in a country is energy in Tunisia. In a very latest research study, Yue et al. (2019) found
required to achieve socio-economic development (Kahouli, 2017). that financial development has a nonlinear influence on energy usage;
Nevertheless; there is a difference of opinion based on research out­ however, the outcome varies according to the selected proxies’ i.e.
comes of various researches related to the positive or negative influence financial intermediaries upsurges the energy usage in all the selected
of various factors on energy consumption. The same was mentioned by countries whereas, development of the financial stock market (except
Shahbaz et al. (2017) that the nexus between utilization of energy and for Poland and China) and financial openness (except for the Kyrgyz
financial development can be complex because there might exist various Republic and Georgia) results in the decline of energy consumption.

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Literature confirms both the direct as well as the indirect influence of into policies, technologies, and economies (Samimi et al., 2012 p. 29).
financial development on energy consumption. In some cases, it was Besides, globalization is a multifaceted paradigm that goes beyond in­
found that financial progress increases energy utilization (Shahbaz and dicators such as mobility of capital and trade openness and has social,
Lean 2012; Sadorsky 2010; Abosedra et al., 2015; Rafindadi, 2016) political, and economic aspects (Potrafke, 2014).
whereas in some cases inverse association (e.g. Yue et al., 2019; It is due to the globalization that the influenced aspects of society and
Sadorsky, 2010) was also discovered. Even though literature highlights economy diversify while broadening the scope of investments and trade
numerous findings but the relationship remains imprecise (Yue et al., flows amongst the countries. In the environment of changing demands
2019). for foreign products, globalization plays an important role in boosting
In the last two decades, due to challenges posed by environmental the structural changes over the industrial fabric. The research related to
shifts, apprehension about trends in public-sector research & develop­ environmental and energy economics underscored the relationship of
ment (R&D) budgets were observed. Organizations cope up with these financial development as an outcome of globalization and energy con­
challenges by introducing important technological innovations in the sumption (Seldon et al., 1994; Shafik and Bandhopadhaya 1992; Ozturk
energy sector (Margolis and Kammen, 1999; Morgan and Tierney, 1998; and Acaravci, 2013; Farhani and Ozturk, 2015; Al-mulali et al., 2015). In
Dooley, 1998). The upsurge of R&D expenses adds to the enhancement a research study, Shahbaz et al. (2016) highlighted that the developing
of energy-related effectiveness in high energy usage activities. It was economy like India has established a favorable situation through glob­
discovered that R&D plays an important role in fostering technological alization and reduced energy consumption. Further in another study,
advancement; in particular for developing nations e.g. China. The Shahbaz et al. (2018) found co-integration between energy usage and
increased investment in R&D will substantially stimulate enterprise globalization in 25 developed nations.
technological advancement (Kapoor et al., 2014). In China, more in­ Numerous studies measured globalization by using various in­
vestment in indigenous R&D also contributed to declining energy con­ dicators. In developed and developing countries these indicators of
sumption in high-energy usage intensity groups and numerous industrial globalization such as trade openness and trade liberalization have
areas (Teng, 2012). These high-tech industries then attain new tech­ influenced energy consumption (Antweiler et al., 2001; Cole, 2006;
nologies with a reduced level of energy consumption through R&D in­ Rafindadi and Usman, 2019). These empirical results highlighted the
vestment and these activities become a big source of knowledge and increase in energy consumption through globalization and its indicators.
technological innovation (Liu et al., 2019; Milani, 2016; Aldieri and The influence of globalization on the consumption of energy is measured
Vinci, 2017). Kapoor and McGrath (2014) highlighted that technolog­ in three dimensions including scale, technique, and composite effect.
ical progress of industries can be promoted by the visible increase in Cole (2006) used the framework of Antweiler et al. (2001) and high­
investment in R&D, whereas insufficient investment in R&D disturbs the lighted that, globalization influences energy consumption directly due
technological advancement (Liu and Xia, 2018), resultantly, such or­ to an increase in economic activity. Whereas, Dollar et al. (2004) stated
ganizations face the challenges of traditional extensive production the technique effect when energy consumption is reduced due to trade
methods, losing a market competitive edge and increase in energy and import of new technology without hindering economic activity. The
consumption (Jung et al., 2018). composite influence of globalization on energy usage is seen when en­
Technological advancement in the energy sector through R&D not ergy usage decreases with the upsurge in production and consumption
only leaves a strong impact on energy consumption level (Zhang et al., undertakings (Stern, 2007). Furthermore, globalization affects energy
2016) but it also performs a key part in the energy sector’s evolution by consumption through the adoption of new production techniques.
improving conservation and utilization methods of energy consumption Globalization brings foreign investment that may increase or decrease
over the last century (Sagar and Zwaan, 2006). According to Sorrell energy consumption and may influence environmental sustainability
(2007), the decline in energy prices due to high-tech progress might (Saud et al., 2018). Mishkin (2009), contended that globalization is one
result in augmented energy consumption by diverse segments of an of the probable aspects among few which induces higher economic
economy and henceforth results in intensified energy usage at the progression, and thus, the energy demand is anticipated to rise to
countrywide level. Popp (2001) also found that technological pro­ conform to the economic progression.
gressions are energy-consuming when prices related to energy are low, Institutional quality indicators are derived by World Economic
and energy-saving when energy-related prices are high. Freedom Index. These indicators are utilized in research to gauge the
Traditionally it is perceived that R&D investment helps in promoting institutional quality as mentioned by Young and Sheehan (2014) and
green technology innovation followed by the reduced energy con­ Manaca (2010). Institutional quality can be measured through five di­
sumption (Klaassen et al., 2005), however, few scholars believe that mensions including; government size, the legal system, financial health,
R&D investment in energy technologies can meet energy demand and trade liberalization, and business regulations. Vowles (2008) stated that
may reduce environmental pollution but it increases expenses and effort government institutions have strong political and constitutional influ­
by stimulating energy consumption (Siddiqui and Fleten, 2010; Kocsis ence to enforce effective policies. The successful implementation of
and Kiss, 2014). The impact of investment in R&D related to energy energy-related policies by the government to augment energy efficiency
usage comes in dual facets (Liu et al., 2019) when investment in R&D might consequently regulate the energy utilization attitude of residents
supports the implementation of new technologies, it decreases con­ (Chang et al., 2018). However, Bhattacharya et al. (2017) found that this
sumption of energy, whereas when investment in R&D directs to eco­ may be contingent on the efficiency of these institutions in imposing
nomic advancement; energy consumption increases. Even though the such rules and processes. The role of institutions becomes vital when
prevalence of multi-opinion-based literature on the link between R&D production and consumption of wood fuels take place as energy alter­
and energy usage, very little research is done on this relationship while natives. Only a few research studies highlighted wood fuel as alterna­
testing the stability of long-term nexus across quantiles. tives to energy resources and the role of institutional quality (Sulaiman
In the last few years, the world has experienced a rapid mode of et al., 2017; Chidumayo and Gumbo, 2013). In African countries
globalization and hence the importance and emergence of R&D have concern for sustainability arises when poor institutional quality ignores
increased its influence on the energy consumption in every country, the utilization of wood as fuel because 80% of fuel in these countries is
especially developing countries like India. The economic activities have based on wood consumption (FAO, 2007).
been expanded as the result of acceleration in globalization (Saud et al., In the literature, few studies reviewed the role of institutional quality
2018). Globalization is the unification of the nation’s economy along and energy efficiency (Sun et al., 2019). These researches found a pos­
with the economy of the world, i.e. the world is incorporated into a itive influence of institutional quality on the efficiency of energy. Sun
single market. Globalization, according to KOF (Globalization Index), is et al. (2019) found proof of a significant positive impact of both green
a mechanism that eliminates national borders and incorporates them innovation and institutional quality on energy efficiency augmentation.

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D.I. Godil et al. Journal of Environmental Management 285 (2021) 112208

Likewise, Chang et al. (2018) also found that institutional quality and its According to Dogan et al. (2016) the incorporation of the national
effective implementation of energy policies to boost energy efficiency economy with that of the world is globalization, which means the
may influence the consumer’s attitude towards energy consumption. combination of the world market into a single market. The notion of
Institutional quality and financial development influence environmental globalization as being a single system raises a significant impact on
quality that further aligns the energy consumption either positively or energy (Chang et al., 2011). Today, the world is associated with each
negatively (Tamazian et al., 2009). In a study of 22 emerging economies, other through different resources such as gas, oil, and coal, etc. So it can
Wu and Broadstock (2015) highlighted the positive influence of insti­ be said that nations are in close associations through energy trade. This
tutional quality on energy consumption. Saidi et al. (2019) identified a depicts that energy can be considered as a substantial component of
causal association between institutional quality and energy usage. globalization (Kurtz et al., 2014). The different measurements of glob­
Keeping in view the scarcity of work on institutional quality, it is alization (economic, social, and political) that are used in this research
required to investigate further its role in energy consumption. effects utilization of energy in different ways. The economic globaliza­
The knowledge of elements related to energy demand is important to tion for a host nation stresses the globalization which is related to the
gain a better insight into, how the demand for energy in emerging na­ growth of investment and trade activities between the host nation and
tions will vary in the future? Based on the above discussion it is quite the other countries. These events will influence energy use in the host
evident that the variable utilized in this study are some of the most nation. Social globalization of a nation empowers individuals to acquire
important factors that have affected the usage of energy. The said var­ the best practices prevalent in other nations and share knowledge in
iables have been selected to fill the gap which was not addressed pre­ different areas of the economy. By doing this, best practices can be
viously. To the best of researchers’ knowledge, the combination of adapted in the field of manufacturing so that the usage of energy can be
variables i.e. financial development, R&D expenditures, globalization, restrained. Further, nations having political globalization are more
and institutional quality have not been addressed concerning energy likely to involve in international agreements and allied matters engaged
consumption in India. Further, the utilization of novel QARDL meth­ towards the betterment of the environment. Usually, the main reason for
odology has added additional robustness to this framework. So it seems greenhouse gas emissions is the combustion of fossil fuels, so such
necessary to address this issue and test the hypotheses with the said agreements of a nation which is committed towards the betterment of
variables concerning the utilization of energy in India. the environment will directly influence its utilization of energy.
Azam et al. (2020) found that the utilization of energy and in­
3. Methodology and data stitutions are associated through the technology adaption. R&D plays a
significant role in adopting technological progression which is beneficial
In this study, the Quantile Autoregressive Distributed Lag (QARDL) for high-tech industries. These high-tech industries then attain novel
approach is employed. The QARDL model is more significant and technologies with reduced utilization of energy through investment in
dominant to linear models based on three grounds. Firstly, this model R&D and other activities which thus becomes a basis of information and
considers locational asymmetry as mentioned by Shahbaz et al. (2018), technological advancement (Aldieri et al., 2017).
Lahiani (2018), and Godil et al. (2020a), where findings and the factors The proxies utilized are as follows e.g. economic freedom index is
may be contingent on the situation of the dependent variable, in our case used for INS_QLT obtained from the Freedom House Report. This index
energy consumption within its conditional distribution. Secondly, ac­ is calculated based on four major broad categories i.e. the rule of law,
cording to Godil et al. (2020b) the QARDL model concurrently considers size of government, open markets, and efficiency of regulations. Each of
the long term association as here in the case of financial development, these categories has its sub-categories which are 12 in total and are
R&D expenses, globalization, and institutional quality with energy uti­ measured on a scale of 0–100. GLOBL is an index computed yearly and
lization and further its related short term dynamics over the quantiles contains political, social, and economic aspects of globalization ob­
ranges of the conditional dissemination of energy utilization. Thirdly, tained from the KOF globalization index. Normalizing of the data is
according to Godil et al. (2020c), unlike the current study, few specific carried out which means that each of the variables is converted to an
studies find the sign of an absence of co-integration amongst these time index ranges from 1 to 100. Domestic loans by the financial sector in %
series, while applying customary econometric methods, like the linear of GDP is used for FIN_DEV. The Local credit given by the financial
ARDL model and the Johansen co-integration test. This disadvantage sector comprises of all gross credit to different sectors and net credit to
could easily be elaborated by the availability of quantile varying the central government. R&D is also measured through expenditure in %
co-integration measurements at short-term degrees, although, in the of GDP. R&D comprises of expenditure of both current and capital na­
long run, the variables remain moving persistently (Xiao, 2009). In the ture provided to government, businesses, non-profit private sector, and
QARDL model due to shocks the co-integrating coefficient changes over higher education. Energy consumption can be calculated in different
the innovation quantile. The QARDL model also dominates over the ways e.g by estimating, by computing energy consumed per annum or
nonlinear models like NARDL developed by Shin et al. (2011), where per product or by the amount of energy saved by upgrading systems
nonlinearly is demarcated by setting the intensity at zero contrary to the (Huysman et al., 2015; Caiado et al., 2017). Here energy in kg of oil/­
QARDL model where it is established based on the data-driven process. capita was used for ENE_CONS. The estimation of energy is based on
Based on these strong shreds of evidence, the QARDL model becomes primary usage before its transformation to other fuels. This is computed
most suitable for the nonlinear and asymmetric relationship of financial by the formula, i.e. adding the usage of energy used in local production,
development, R&D expenses, globalization, and institutional quality the imports and changes in stock, and subtracting the exports and supply
with energy consumption in India. of fuel to aircraft and ships used for international purposes. The data of
This research involves the following variables: FIN_DEV, R&D, all three i.e. R&D, FIN_DEV, and ENE_CONS was obtained from the
GLOBL, and INS_QLT to gauge the ENE_CONS in India. Concerning the World Bank.
Indian economy Grossman and Krueger (1991) stated the due to the The time-series data from 1995 to 2018 was analyzed in this
growth of the economy i.e. income effect, there is a chance of an increase research. The annual data was collected which was further converted
in demand for energy usage. The financial market is one of the leading into quarterly data by utilizing the match-sum method as done by (Sharif
reasons that have a substantial influence on the expansion of different et al., 2019a, 2019b; Suki et al., 2020; Godil et al., 2020b, c). As rec­
sectors. According to Denisova (2020) due to financial development and ommended by Cho et al. (2015) that for the application of QARDL long
resulting economic growth more economic undertakings will be per­ data series is required, and to deal with this quadratic match sum
formed by different sectors which entail more energy. Thus the expan­ method was helpful. This procedure is helpful to convert the frequency
sion of financial markets ultimately results in the growth of the economy information from lower to higher, as it allows the adjustment of the
and leads to an increased usage of energy for various purposes. periodic abnormality by reducing deviation in end-to-end information.

5
D.I. Godil et al. Journal of Environmental Management 285 (2021) 112208

So, the QARDL model suggested by Cho et al. (2015) was utilized to Table 1
show the long-run and short-run nexus between the FIN_DEV, R&D, Results of descriptive statistics.
GLOBL, and INS_QLT (independent variables) and ENE_CONS (depen­ Variables R&D FIN_DEV INS_QLT GLOBL ENE_CONS
dent variable). The basic form is as follows.
Mean 0.764 62.334 52.208 52.269 476.664
p
∑ q
∑ Minimum 0.620 43.609 45.100 40.952 385.092
ENE CONS ​ t = μ + υENE CONSi ENE CONS ​ t− i + υR&Di R&Dt− i Maximum 0.867 77.917 56.200 58.274 636.570
i=1 i=0 Std. Dev. 0.071 11.968 2.975 5.835 81.856
∑
r ∑
U Skewness − 0.423 − 0.158 − 0.736 − 0.517 0.652
+ υFIN DEVi FIN DEVt− i + υINS QLT ​ i ​ INS QLT ​ t− Kurtosis 2.282 3.577 2.606 4.814 3.974
i
i=0 i=0 Jarque-Bera 15.872 22.037 32.322 18.167 24.295
∑
v Probability 0.000 0.000 0.000 0.000 0.000
+ υGLOBLi GLOBLt− i + εt (1)
Source: Authors Estimation
i=0

where εt is explained as ENECONSt – E [ENECONSt /γ t− 1 ] with Φt− 1 is the existing R&D, FIN_DEV, INS_QLT, GLOBL on the concurrent level of
smallest €- field due to {ENECONSt , ​ R&Dt , ​ FINDEVt , ​ INSQLTt , ​ GLOBLt , q
∑
ENE_CONS is measured through ωR&D * = ωR&D I , λFIN DEV *
=
​ ENECONSt− 1 , ​ R&Dt− 1 , ​ FINDEVt− 1 , o o o
i=1
INSQLTt− 1 , GLOBLt− 1 } and p, q, r, u, and v are lag orders indicated by r
∑ u
∑ v
∑
λFIN DEV i
, θINS QLT *
= θINS QLT i
and δGLOBL *
= δGLOBL i
. In e.g. 4
the Schwarz information criterion (SIC). In e.q.(1) ENE_CONS, R&D, i=1
o o
i=1
o o
i=1
o

FIN_DEV, INS_QLT, and GLOBL are energy consumption, research & above the parameter ρ ought to be negative and significant. The long-run
development, financial development, institutional quality, and co-integrating parameter for R&D, FIN_DEV, INS_QLT, GLOBL is β. We
globalization. have utilized the following formula,
The extended model with respect to quantile for our e.q. (1) i.e.
βR&D βFIN βINS
QARDL (p,q,r,s,v) is: DEV QLT
βR&D* = − . βFIN DEV* =− . βINS QLT* =− , βGLOBL*
ρ ρ ρ
∑
P βGLOBL
QENE CONSt = μ(τ) + υENE CONSi ( τ) ENE CONS ​ t− i = − .
i=1
ρ
q
∑ ∑
r
Through the Wald test, we have studied the statistical short and long-
+ υR&Di (τ)R&Dt− i + υFIN DEVi ( τ)FIN DEVt− i
run asymmetric influences of R&D, FIN_DEV, INS_QLT, GLOBL on
i=0 i=0
ENE_CONS. For example, for ρ, i.e. the parameter for speed of adjust­
∑
U ∑
v
+ υINS QLT ​ i ( τ)INS QLT ​ t− i + υGLOBLi (τ)GLOBLt− i + εt (τ) (2) ment, following is the null hypothesis,
i=0 i=0 ρ* (0.05) = ρ* (0.10) … … … …. ρ* (0.95). The same line of action
was utilized for βR&D , βFIN DEV , βINS QLT and βGLOBL parameters and for
where, εt (τ) = ENE CONS ​ t − QENE CONSt ( τ /£t− 1 )(Kim and White, explicit lags showing short term parameters, ωR&D, λFIN_DEV, θINS_QLT, and
2003) and 0 > τ < 1 illustrates quantile. Owing to the chance of serial δGLOBL.
correlation in the error term, the QARDL in eq. (2) can be further written
as: 4. Results and discussion
QΔENE CONSt = μ + ρENE CONS ​ t− 1 + κR&D R&Dt− 1 + κFIN DEV FIN DEVt− 1
This study aims to investigate the nexus between financial devel­
+ κINS INS QLT ​ t− 1 + κGLOBL GLOBLt−
QLT ​ 1
opment, research and development expenditures, globalization, insti­
tutional quality, and energy consumption in India. Table 1 indicates the
∑
P q
∑
+ υENE CONSi ΔENE CONS ​ t− i + υR&Di ΔR&Dt−
descriptive statistics of variables, used for this research.i.e. R&D, FIN_­
i
i=1 i=0

∑
r ∑
U DEV, INS_QLT, GLOBL, and ENE_CONS concerning India. All the mean
+ υFIN DEVi ΔFIN DEVt− i + υINS QLTi ΔINS QLT ​ t− i values are positive. The mean for R&D is 0.764 with a range of 0.620
i=0 i=0 minimum and 0.867 maximum. The mean of FIN_DEV is found to be
∑ 62.334 with the minimum and maximum value of 43.609 and 77.917
v
+ υGLOBLi ΔGLOBLt− i + εt (τ)
i=0
respectively. The mean of INS_QLT is 52.208 with 45.100 and 56.200 as
(3) a minimum and maximum values respectively. The mean of GLOBL is
found to be 52.269 with a 40.952 minimum and 58.274 maximum
As per QARDL framework, eq. (3) can be modified according to Cho values. Finally, the mean of ENE_CONS is found to be 476.664 with
et al. (2015) for ECM form: 385.092 minimum and 636.570 maximum values. Moreover, the result
QΔENE CONSt = μ(τ) + ρ(τ)(ENE CONS ​ t− 1 − βR&D (τ)R&Dt− 1

− βFIN DEV ( τ)FIN DEVt− 1 − or 5) βINS QLT ​ (τ)INS QLT ​ t− 1 Table 2

∑
P
Results of Unit Root test.
− βGLOBL (τ)GLOBLt− 1 ) + ϕi (τ)ΔENE CONS ​ t− i
i=1 Variable R&D FIN_DEV INS_QLT GLOBL ENE_CONS
q
∑ ∑
r
R&DI FIN DEV I ADF 0.381 − 1.432 − 0.983 − 1.004 0.471
+ ω (τ)ΔR&Dt− i + λ (τ)ΔFIN DEVt− i
(Level)
i=0 i=0
ADF (Δ) − 5.372*** − 5.037*** − 3.983*** − 3.868*** − 4.058***
∑
U ∑
v
ZA (Level) − 0.873 − 2.146 − 2.984 − 3.091 − 2.361
+ θ ​ INS QLT ​ I
(τ)ΔINS QLT ​ t− i + δGLOBLI (τ)ΔGLOBLt− i
Year 2010 Q1 2009 Q2 2014 Q4 2002 Q3 2017 Q4
i=0 i=0
ZA (Δ) − 8.217*** − 6.698*** − 5.998*** − 7.023*** − 6.128***
+ Δt (τ) Year 2004 Q2 2010 Q4 2012 Q2 2008 Q2 2015 Q1
(4) Notes: The values in this matrix specify the ADF and ZA tests’ statistics for
Through the delta method, the aggregate short-run effect of the stationarity property. ***, ** and * indicate a level of significance at 1%, 5% and
previous ENE_CONS on current ENE_CONS was gauged and it is denoted 10%, respectively. The critical values for the ZA test are − 5.57(1%), − 5.08 (5%)
and − 4.82 (10%).
by ϕ. In the same way, the cumulative short-run effect of past and
Source: Authors Estimation

6
 D.I. Godil et al.
Table 3
Results of quantile autoregressive distributed lag (QARDL).
Quantiles (τ) Constant ECM Long Run Coefficients Short Run Coefficients

α*(τ) ρ*(τ) βR&D(τ) βFIN-DEV(τ) βINS-QLT(τ) βGLOBL(τ) ϕ1 (τ) ωR&D

o (τ) ωR&D
1 (τ) λFIN
o
DEV
(τ) λFIN
1
DEV
(τ) θoINS QLT
(τ) δGLOBL
o (τ)

0.05 0.078 − 0.060*** − 0.784*** 0.053*** − 0.004 0.037*** 1.574*** 0.002** 0.045*** 0.029** 0.012 − 0.002 0.004
(0.068) (0.016) (0.019) (0.008) (0.003) (0.005) (0.259) (0.001) (0.003) (0.014) (0.007) (0.004) (0.003)
0.10 0.199*** − 0.158*** − 0.710*** 0.064*** − 0.004** 0.088*** 1.094*** 0.002** 0.031*** 0.047* 0.014*** 0.002 0.002
(0.050) (0.040) (0.035) (0.006) (0.002) (0.011) (0.249) (0.001) (0.001) (0.027) (0.005) (0.002) (0.002)
0.20 0.062* − 0.185*** − 0.589*** 0.066*** − 0.006*** 0.261*** 0.901*** 0.002** − 0.002** 0.055*** 0.006** 0.002 0.002
(0.034) (0.027) (0.038) (0.005) (0.001) (0.032) (0.155) (0.001) (0.001) (0.013) (0.003) (0.002) (0.002)
0.30 0.068** − 0.211*** − 0.542*** 0.074*** − 0.002** 0.121** 1.102*** 0.002 0.002** 0.047*** 0.012*** − 0.002 − 0.008***
(0.033) (0.026) (0.047) (0.005) (0.001) (0.048) (0.147) (0.002) (0.001) (0.013) (0.004) (0.003) (0.002)
0.40 0.099** − 0.080** − 0.464*** 0.072*** − 0.004*** 0.002** 1.211*** 0.016*** 0.004 0.045*** 0.006 0.004 − 0.014***
(0.036) (0.028) (0.041) (0.005) (0.001) 0.001 (0.157) (0.001) (0.003) (0.013) (0.004) (0.003) (0.003)
7

0.50 0.109*** − 0.088*** − 0.384*** 0.111*** − 0.004** 0.002 1.289*** 0.051*** 0.008*** 0.041** 0.006 0.012*** − 0.006***
(0.038) (0.030) (0.028) (0.005) (0.002) (0.002) (0.185) (0.001) (0.002) (0.017) (0.004) (0.003) (0.002)
0.60 0.023 − 0.023 − 0.255*** 0.101*** − 0.004*** 0.004*** 1.523*** 0.076*** 0.012*** 0.014 0.004 0.018*** − 0.002
(0.036) (0.028) (0.021) (0.005) (0.001) (0.001) (0.177) (0.001) (0.003) (0.018) (0.005) (0.004) (0.003)
0.70 − 0.016 − 0.012 − 0.199*** 0.103*** − 0.023*** 0.002 1.297*** 0.096*** 0.002 0.002 0.002 0.002 0.002
(0.036) (0.028) (0.004) (0.005) (0.002) (0.002) (0.175) (0.005) (0.003) (0.024) (0.004) (0.004) (0.003)
0.80 − 0.031 − 0.296*** − 0.174*** 0.099*** − 0.113*** 0.008*** 1.090*** 0.107*** 0.006*** 0.016 0.006 0.004 0.002
(0.038) (0.030) (0.003) (0.005) (0.005) (0.001) (0.175) (0.014) (0.001) (0.026) (0.004) (0.004) (0.003)
0.90 − 0.055 − 0.333*** − 0.246*** 0.082*** − 0.203*** 0.010*** 0.969*** 0.138*** 0.008*** 0.025 − 0.003 0.010** 0.005
(0.043) (0.035) (0.005) (0.003) (0.007) (0.001) (0.158) (0.018) (0.001) (0.028) (0.005) (0.005) (0.005)
0.95 0.029 − 0.374*** − 0.369*** 0.090*** − 0.359*** 0.023*** 1.078*** 0.277*** 0.004*** 0.025 − 0.006 0.007 0.003
(0.042) (0.034) (0.003) (0.002) (0.011) (0.001) (0.173) (0.039) (0.001) (0.038) (0.005) (0.006) (0.004)

Journal of Environmental Management 285 (2021) 112208

Note: The table reports the quantile estimation results. The standard errors are between brackets. ***, ** and * indicate significance at the 1%, 5% and 10% levels, respectively.
Source: Author Estimations.
ECM represents Error correction term.
D.I. Godil et al. Journal of Environmental Management 285 (2021) 112208

of the Jarque-Bera test depicts that R&D, FIN_DEV, INS_QLT, GLOBL, from 1995 to 2018, enhancement in financial development raised the
and ENE_CONS are not normally distributed at the significance level of living standard in India that aided in expanding the energy demand and
1%, which depicts that further analysis can be done through a nonlinear energy consumption. The results of GLOBL indicate that it is positive and
model (Arain et al., 2020; Mishra et al., 2019; Sharif et al. 2017, Sharif significant at all quantiles except at 0.50 and 0.70. It means that upsurge
et al., 2019a, 2019b; Batool et al., 2019). in the GLOBL increases the ENE_CONS in India. These results are aligned
Table 2 indicates the findings of the unit root test for which ZA and with the researches of (Mishkin, 2009; Cole 2006; Dogan and Deger,
ADF tests were used. The outcomes of these tests depict whether the data 2016). When developing nations move towards more urbanization and
is stationary or not. Moreover, with the help of the ZA test, the structural industrialization, the outcome of globalization is CO2 emission due to
breaks are also accounted for. However, in this particular research, all substantial usage of energy domestically. It influences the utilization of
the variables are not stationary at I (0) i.e. at level but are stationary at I energy not only due to manufacturing, consumption, and allied activ­
(1) i.e. at first difference. ities but also due to the diffusion of technology across borders. Ac­
Table 3 indicates the result of the QARDL model estimation for India. cording to Shahbaz et al. (2016) upsurge in the usage of energy may
The ρ parameter indicates a significant association with the negative result due to globalization in the host nation if the country’s strategy
sign at all quantiles except 0.60 and 0.70. It shows the dependency of the includes an invitation to foreign businesses to start their operations
parameter. Moreover, the results depict the long term association be­ without emphasizing the reduction of energy consumption.
tween the independent variables (R&D, FIN_DEV, INS_QLT, GLOBL) and Moreover, the short-term dynamics show that existing ENE_CONS
dependent variable (ENE_CONS) represented by β. The result of R&D changes are positively and significantly influenced from low to high
shows that it is highly significant and negative at all quantiles i.e. from quantiles i.e. from 0.05 to 0.95 by their specific previous levels in India.
0.05 to 0.95. This result depicts that R&D is negatively associated with The prevailing and past changes in R&D significantly and positively
ENE_CONS which means that at all intensities of energy consumption in influences the prevailing and past variations in ENE_CONS at all quan­
India an increase in R&D will decrease ENE_CONS. These results are tiles, whereas past and current changes in FIN_DEV significantly and
consistent with previous researches such as (Liu et al., 2019; Milani, positively influence the past and current variations in ENE_CONS at low
2016; Aldieri and Vinci, 2017; Klaassen et al., 2005). R&D leads to novel to moderate quantiles range from 0.05 to 0.50. The current and previous
knowledge, procedures, and products due to technology. Hoffert et al. variations in INS_QLT positively and significantly influence the previous
(2002) found that the expansion of novel technologies can support the and current changes in ENE_CONS at moderate quantile i.e. from 0.50 to
reduction of harmful effects of the environment due to the usage of 0.60 and at high quantile i.e. 0.90. Moreover, the past and current
energy consumption by improving energy efficiency. INS_QLT is nega­ changes in GLOBL significantly and negatively influence the variations
tive and significant at all quantiles except for 0.05. This result indicates in ENE_CONS at moderate quantiles ranges from 0.30 to 0.50. Therefore,
that at low quantile i.e. at 0.05 INS_QLT does not influence ENE_CONS the overall outcomes of the QARDL model suggest that R&D, FIN_DEV,
whereas, at quantiles ranges from 0.10 to 0.95, an increase in INS_QLT INS_QLT, and GLOBL are negative or positive determinants of ENE_­
decreases the ENE_CONS in India. This result is aligned with the out­ CONS both in the long run as well as in the short run with respect to
comes of the study carried out by Sun et al. (2019). It was acknowledged India.
that energy efficiency can be stimulated through INS_QLT. As Ali et al. Table 4 indicates the Wald test outcomes of parameter dependency
(2019) stated that quality institutions can effectively put their efforts for the short-run and long-run parameters. Furthermore, in the long-run
towards the mitigation of carbon emissions, and henceforth improve the and short-run parameters, the Wald test also analyses the nonlinearities
quality of the environment along with economic development. So, here for evaluating locational asymmetries (Cho et al., 2015). Overall for ρ,
the negative nexus shows the successful execution of green policies by the null hypothesis is rejected in this model. Furthermore, the outcomes
the institutions and government of India to enhance efficiency in energy of this research show that the Wald test rejects the null hypothesis for all
usage. variables such as R&D, FIN_DEV, INS_QLT, and GLOBL in the long-run
The FIN_DEV is highly significant and positive at all quantiles i.e. parameter. Whereas, in the short run parameters, the Wald test rejects
0.05–0.95. This result indicates that an increase in FIN_DEV will in­ the null hypothesis for all the variables except INS_QLT, which shows
crease ENE_CONS in India irrespective of the magnitude of ENE_CONS. that the variables such as R&D, FIN_DEV, and GLOBL along with
These results are consistent with previous researches such as (Eren et al., ENE_CONS depicts non-linear and asymmetric association, whereas,
2019; Sadorsky, 2010; Yue et al. (2019; Islam et al., 2011). Even though INS_QLT which is insignificant i.e. Wald test failed to reject the null
financial development gives opportunities for financial capital by hypothesis, shows a linear and symmetric association. Further, under
increasing the confidence of the investors and helps them in the adop­ the lag period, the short term cumulative influence of R&D and FIN_DEV
tion of energy-efficient products, the results of this study indicated that is significant.
The results of the Granger causality test are depicted in Table 5. It
shows the causality between the two variables at different quantiles. The
Table 4 findings indicate that a bidirectional causal nexus is present between
Results of the Wald test for the constancy of parameters. R&D, FIN_DEV, and ENE_CONS i.e. which runs from R&D to ENE_CONS
Variables Wald-Statistics [P-value] and FIN_DEV to ENE_CONS, however, a unidirectional nexus was found
ρ 8.573*** [0.000] between INS_QLT, GLOBL and ENE_CONS, which means that ENE_CONS
βR&D 4.342*** [0.000] occurs due to INS_QLT and GLOBL but the vice versa condition i.e. which
βFIN_DEV 5.059*** [0.000] runs from ENE_CONS to INS_QLT and ENE_CONS to GLOBL is absent.
βINS_QLT 1.550* [0.097]
βGLOBL 1.890** [0.048]
ϕ1 7.351*** [0.000] 5. Conclusion and policy recommendations
ω0 4.397*** [0.000]
ω1 0.204 [0.999] In the previous researches, several scholars have researched the
λ0 7.942*** [0.000] causality nexus between different variables and consumption of energy
0.496 [0.841]
in India, but keeping in view the QARDL methodology, the association
λ1
θ0 0.355 [0.897]
δ0 5.604*** [0.000] between the variables that are used in this research has not been
Short-term cumulative effect explored earlier. The outcomes of QARDL disclose that R&D, financial
ω* 4.065*** [0.000] development, globalization, and institutional quality significantly in­
7.503*** [0.000]
λ*
fluence energy usage in India. R&D and institutional quality have a
Source: Authors Estimation negative effect on energy usage. In R&D and institutional quality, it is

8
D.I. Godil et al. Journal of Environmental Management 285 (2021) 112208

Table 5
Granger causality in quantile test results.
Quantiles ΔR&Dt ΔENE_CONSt ΔFIN_DEVt ΔENE_CONSt ΔINS_QLTt ΔENE_CONSt ΔGLOBLt ΔENE_CONSt ↓
↓ ↓ ↓ ↓ ↓ ↓ ↓ ΔGLOBLt
ΔENE_CONSt ΔR&Dt ΔENE_CONSt ΔFIN_DEVt ΔENE_CONSt ΔINS_QLTt ΔENE_CONSt

[0.05–0.95] 0.000 0.000 0.000 0.000 0.000 0.284 0.000 0.284

0.05 0.000 0.000 0.000 0.000 0.000 0.119 0.000 0.119
0.10 0.000 0.000 0.000 0.000 0.000 0.186 0.000 0.186
0.20 0.000 0.000 0.000 0.000 0.000 0.203 0.000 0.203
0.30 0.000 0.000 0.000 0.000 0.000 0.240 0.000 0.240
0.40 0.000 0.000 0.000 0.000 0.000 0.477 0.000 0.477
0.50 0.000 0.000 0.000 0.000 0.000 0.573 0.000 0.573
0.60 0.000 0.000 0.000 0.000 0.000 0.603 0.000 0.603
0.70 0.000 0.000 0.000 0.000 0.000 0.648 0.000 0.648
0.80 0.000 0.000 0.000 0.000 0.000 0.592 0.000 0.592
0.90 0.000 0.000 0.000 0.000 0.000 0.424 0.000 0.424
0.95 0.000 0.000 0.000 0.000 0.000 0.382 0.000 0.382

Source: Author Estimation

significant at all the quantiles except for 0.05 in the case of institutional increased demand for high technology energy-efficient products for
quality. It shows that due to the increase in institutional quality and energy consumers at an individual and industrial level, which further
R&D in the country, the consumption of energy is likely to decrease. needs not only more consideration by the policymakers but also more
However, financial development and globalization have a positive effect investment in the renewable energy sector by the government and pri­
on the consumption of energy. In the case of financial development and vate sectors. To enhance renewable energy utilization it is suggested that
globalization, it is significant at all the intensities except for 0.50 and government and policymakers should develop such policies that support
0.70 for globalization. the usage of renewable energy to decrease the high rate of traditional
Financial development and the process of globalization increases the energy consumption, through enhanced institutional quality. Further,
rate of energy consumption in India. The process of globalization opens the shift needs to be phase-wise among industries and houses as rec­
the countries’ borders for trade and investment, and the resulting FDI ommended by Destek et al. (2020) for some OECD nations. The analysis
influences the environmental quality followed by the increased energy of this study stands imperative due to the apprehensions about rising
consumption. The increase in economic activities due to globalization energy consumption around the globe which is due to the proven
will ultimately require funds to fulfill the increased demand. From here empirical basis between economic progression and energy demand.
the role of the financial sector becomes imperative. The financial sector
of any nation plays an important role in the prosperity of that country. Author contribution
An established financial system will effectively channel credits into a
renewable energy sector as compared to an underdeveloped system of Danish Iqbal Godil: Conceptualization, Methodology, Software;
finance which may prohibit the emergence of new projects, even if de­ Arshian Sharif: Data curation, Writing – original draft; Muhammad
mand for them is present. Our results suggest that, according to the Iftikhar Ali: Visualization, Investigation; Ilhan Ozturk: Supervision,
development in the local financial market in India, policymakers need to Editing, Software, Validation; Rimsha Usman: Writing- Reviewing
develop diverse policies and energy strategies, by facilitating the
adoption of the latest technological energy-efficient products to Declaration of competing interest
decrease the consumption of energy in the country. In India, based on
the results of this study, it is suggested that the adverse effect of financial The authors declare that they have no known competing financial
development on energy consumption can be reduced through rising interests or personal relationships that could have appeared to influence
domestic credit to the private sector, providing high debt with low- the work reported in this paper.
interest rates. However, the result can be in the shape of a rebound ef­
fect as here the positive effect might be due to the same reason as
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