Transmission channels of oil and finance toward promoting growth in China: the role of industrialization

ABSTRACT

We trace the transmission channels of oil and finance to determine the extent of the energy-led and finance-led growth hypotheses in China from 1965 to 2016. We failed to find evidence that supports the energy-led growth and finance-led growth hypotheses. Instead, the results suggested that industrialization is the main factor that fuels economic growth. Oil consumption and financial development influence growth in China are pass-through the channels of industrialization. The key findings of this study are that energy and finance itself does not influence economic growth, while the impacts of energy and finance on economic growth being contingent upon industrialization.

KEYWORDS:

• Economic growth
• financial development
• Granger causality
• industrialization
• oil consumption

JEL CLASSIFICATION:

• C32
• O13

Acknowledgments

I would like to express my appreciation to an anonymous reviewer for his/her constructive comments and suggestions that significantly improve the earlier version of this research paper. However, I bear sole responsibility for any errors and weaknesses in this paper.

Disclosure statement

No potential conflict of interest was reported by the author.