Impact of China's Stock Market Development on Energy Consumption: An Empirical Analysis

Abstract

To investigate the influence of China's stock market development on energy consumption, the Grey Relational Analysis and Granger causality test approaches are used. Empirical results indicate that, first, the grey relational grade appears relatively high for both stock market scale and efficiency and energy consumption during 1992-2009, with 0.84 and 0.73, respectively. Second, China's stock market scale enlargement becomes an evident driver for energy consumption increase, while the influence of stock market efficiency is insignificant. Finally, energy consumption upsurge caused by stock market scale expansion of Farming, Forestry, Animal Husbandry, Fishery and Construction industries, and stock market efficiency promotion of Electric Power, Gas and Water Production and Supply and Manufacturing industries should be paid close attention.