# Energy Consumption and Financial Development in NAFTA Countries, 1971-2015
## 2 Review of the Literature  
According to the literature review, energy is fundamental to producing the goods and services that lead to the satisfaction of human needs, so it is important to know the energy-growth nexus incorporating other important variables, such as financial development, trade, urbanization, etc. Some of the most prominent works about various regions or countries are mentioned below. [PERSON] [13] analyzes the relationship between energy, trade, growth, and financial development in newly industrialized countries. The cointegration results confirm a long-term relationship between the variables, and there is evidence of the Kuznets curve. Financial development and capital accumulation help the energy efficiency after a certain level of income. For a sample of 53 countries, [PERSON] [14] explores the non-linear effects of financial development and income on energy consumption. In emerging markets and developing countries, energy consumption increases with income, while in the case of advanced countries, energy consumption increases with income after the point at which the income level threshold is reached. [PERSON] and [PERSON] [15] analyze the relationship between energy consumption and financial development for the countries of the European Union (EU). The relationship is not significant for EU27, but when only old members are included, there is a strong positive impact of financial development on energy consumption. For new members, this impact depends on how financial development is measured. [PERSON] and [PERSON] [16] study the relationship between energy demand, financial development, economic growth, foreign direct investment (FDI), trade, and capital for the United States. There is evidence of a cointegration relationship between the variables. Regarding energy demand in the long run, there is a negative relationship with financial development, GDP, and FDI, and a positive impact with trade and capital. In the long run, the causal relationship is from GDP, FDI, trade, and capital to the energy demand, and it is bidirectional between FDI and trade. In the case of Asian countries, [PERSON] [17] investigates the relationship between energy consumption and financial development. The results show evidence of a cointegration relationship between the variables and a unidirectional causal relationship from energy consumption to financial development. [PERSON] and [PERSON] [10] analyze the finance-growth-energy nexus for Pakistan through the GMM estimation, incorporating the energy prices and urbanization as additional variables. The results reveal that there is a significant and positive impact of economic growth, financial development, and urbanization on energy consumption. Figure 1: Determinants of energy consumption. [PERSON] et al. [18] explore the relationship between financial development and energy consumption for Saudi Arabia, including economic growth, capital, and urbanization as additional variables in their model. The results confirm the existence of a cointegration relationship between the variables. In the long term, there is a positive and significant impact of financial development, urbanization, and capital on energy consumption, while with economic growth there is a negative relationship. In addition, there is a unidirectional causal relationship of financial development to energy consumption. [PERSON] et al. [19] analyze the relationship between energy consumption, economic growth, and financial development in the 35 Financial Action Task Force (FATF) countries. In terms of causality, financial development and energy consumption cause economic growth; that is, the development of the financial sector and the energy sector strengthen economic growth in these countries. [PERSON] [3] analyzes the impact of financial development on energy consumption in 22 emerging countries, using the technique of estimating the generalized method of moments with panel data.