Banking development, economic growth and energy consumption in Vietnam

tical tests that have conducted in the 
previous section. 
The results in the above Table 5 shows that both in long term 
and short-term energy consumption has a significant impact on 
economic growth in Vietnam. However, banking development 
in both long and short term does not impact economic growth. 
Nonetheless, collectively, the model was found to be significant. 
5. DISCUSSION 
Energy is a pivotal input which is used in all the different phases 
of production and is considered to be a significant resource 
used for increasing the welfare of societies. Consequently, it is 
considered to be an important determinant of economic growth 
for a country. From the assessment of the previous researches, 
there are certain studies that have found a significant relationship 
between the two variables. The long-term relationship between 
energy consumption and growth of the economy are vital for the 
purpose of determining the future growth and production (Begum 
et al., 2015). In alignment with the previous researches, the results 
of this research have shown that in the case of Vietnam, energy 
consumption has a long-term as well as short term association 
with the economic growth. 
There is also significant amount of literature which has indicated an 
association between banking development and economic growth. 
According to the study of Campiglio (2016) banking sector plays 
a key role in the economic development of all countries. At the 
same time, the formation of banking infrastructure, expansion of 
the range and increase in the volume of banking operations and 
services have a more significant impact on developing economies. 
The results of this research have indicated that there is no 
significant impact of banking development on economic growth in 
the case of Vietnam. The findings of this research contradict with 
the stance presented by Hannig and Jansen (2010), in developing 
countries, the degree of coverage of the population with banking 
services plays an important role in the development of the financial 
system. This research has determined both the short-term impact 
as well as long-term impact however, in the case of Vietnam, both 
cases show insignificant results. 
The assessment of the results of this research paper indicates that 
other than individual assessment of the predictors with economic 
Table 3: ARDL model
 Coef. Std. err. t P>|t| (95% conf. interval)
Economic growth -0.4809765 0.13524 -3.56 0.002 -0.760732 -0.2012
LR
Energy consumption -0.0835438 0.03021 -2.77 0.011 -0.146041 -0.021
Banking development 1.76E-10 1.82E-10 0.96 0.345 -2.01E-10 5.52E-10
SR 
Energy consumption 0.1107152 0.05275 2.1 0.047 0.0015998 0.21983
Banking development 4.98E-10 2.66E-10 1.87 0.074 -5.19E-11 1.05E-09
_cons 5.120611 1.29547 3.95 0.001 2.44072 7.8005
Table 4: Bounds test
10% 5% 1% P-value
I(0) I(1) I(0) I(1) I(0) I(1) I(0) I(1)
F 3.42 4.546 4.265 5.564 6.337 8.045 0.002 0.008
t -2.574 -3.236 -2.938 -3.641 -3.692 -4.477 0.014 0.058
Table 5: Hypothesis assessment table
S. no. Hypothesis statement P-value Result
H1 There is a significant impact of 
energy consumption on economic 
growth in the long run
0.011 Accepted
H2 There is a significant impact of 
banking development on economic 
growth in the long run
0.345 Rejected
H3 There is a significant impact of 
energy consumption on economic 
growth in the short run
0.047 Accepted
H4 There is a significant impact of 
banking development on economic 
growth in the short run
0.074 Rejected
Nguyen: Banking Development, Economic Growth and Energy Consumption in Vietnam
International Journal of Energy Economics and Policy | Vol 11 • Issue 1 • 2021 637
growth, the overall model was found to be statistically viable. It 
can be inferred from the findings of this research as well as the 
previous studies that countries must be careful in terms of their 
energy consumption because its effect is directly translated as the 
economic growth. 
6. CONCLUSION 
The primary objective of this study was to find out the impact of 
energy consumption and banking development on economic growth 
of Vietnam during the period ranging from 1990 to 2019. For the 
historic data, a range of statistical tests were applied on Stata to 
achieve the aim of the study. The results indicated that the data was 
non-stationary and had trend which can predict the future data. Based 
on this condition, ARDL test and Bounds test were applied. The 
results indicated that overall, the model was found to be significant. 
Individually, energy consumption had a significant impact in both 
short term and long term however, there was insignificant association 
among banking development and economic growth. Based on 
the findings of this study, it is recommended for the government 
of Vietnam and policy makers to pay close attention towards 
developing strategies that helps in attaining higher mobilisation of 
energy savings to gain confidence of Vietnam’s investors, and also 
to attract the foreign investments in Vietnam. However, the energy 
consumption should be done in such a manner that it contributes 
to the welfare of country and society. Irresponsible consumption 
of energy can cause increase in greenhouse emission which in turn 
are bad for the environment. Future researches can be carried out 
to study the role of CO2 emissions on economic growth.
6.1. Recommendations 
This following recommendation are proposed based on the overall 
research outcomes:
•	 It is quite evident from the findings that financial developments 
and economic growth significantly increase the energy 
demand, thus consumption of energy is probably the most 
vital aspect for enhancing the country’s economic growth. 
Based on this, it has been recommended to the policy makers 
to pay close attention towards developing strategies that helps 
in attaining higher mobilisation of energy savings to gain 
confidence of Vietnam’s investors, and also to attract the 
foreign investments in Vietnam.
•	 It has also been recommended to the policy makers of Vietnam 
to must emphasise on developing and exploring domestic 
resources of energy to safeguard the country from any adverse 
external energy blow. This has played a major role in reducing 
the dependence of Vietnam on energy imports and strengthen 
the country’s economic growth.
•	 The government of Vietnam has also been advised to introduce 
some important measures and reforms for strengthening the 
banking development, as well crafted and designed strategy 
for financial sector tends to strategize many other reforms 
supported by private and public sector development and 
stakeholders’ partners. 
6.2. Limitations and Future Research 
There were certain limitations that have been associated with 
this study, which can be addressed in the future research to make 
an important contribution in the existing literature. The key 
limitation of this research has been linked with its limited scope, 
as researcher has conducted this study in the context of Vietnam, 
thus the findings and analysis presented in this study cannot viewed 
in another scenario or context. In this regard, future researchers 
are advised to widen the research scope by carrying out this 
study with the incorporation of more countries into the research 
investigation. This will help in providing a complete picture with 
more conclusive results about the research topic. On the other 
hand, the human perspective in the shape of qualitative data has 
also been missing from this study, as researcher has only followed 
quantitative research design to inquire about the association 
between the research variables. Hence, future researchers can 
consider conducting the same study with mixed research design 
to provide more conclusive results. 
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