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ABSTRACT
Even though a number of studies have attempted to determine the relationship between energy consumption and economic growth, not much empirical evidence is available to indicate the direction of the relationship. This article provides dynamic interactions between energy consumption, financial development and economic growth in Pakistan and Malaysia for the period 1980–2010 by employing cointegration and error correction techniques. Granger causality within an error correction framework is used to determine the direction of causality between financial development and energy consumption.