# Energy Consumption and Financial Development in NAFTA Countries, 1971-2015
## 1 Introduction  
It is important to consider that energy is used to produce most of the goods and services that satisfy the wishes and needs of the world population, so it is crucial to know its determinants. Due to the above, energy consumption, production, and international trade tend to move together [1]. The world population has had rapid growth in recent decades, from 3686 million in 1970 to 7185 million people by 2017 [2]. Specifically, for the NAFTA countries from 1970 to 2017, the population of Canada went from 17.9 to 36.7 million people; Mexico went from 38.17 to 129.16 million people; and finally, the United States went from 180.67 to 325.71 million people [2]. The world energy consumption has had a similar behavior, growing from 1.33 to 1.92 million kg of oil equivalent per capita from 1971 to 2014. In the case of the NAFTA countries in the same period, Canada went from 4.25 to 7.60, the United States from 5.64 to 6.79 and while Mexico from 0.70 to 1.51 [2], with the first two countries having the highest energy consumption per capita in the world. Financial development includes accessing and promoting financial activities in a country, such as foreign direct investment and increasing banking activity, stock market activity, and domestic credit to the private sector, which affect economic efficiency, activity economic, and energy demand [3; 4]. Financial development drives the reduction of financial risk and the costs of loans, promotes greatertransparency among borrowers and lenders, fosters greater flows of financial capital and investment, and facilitates access to more efficient energy products, among other things, which can affect the demand for energy by increasing consumption and business investments [3; 4]. Financial development affects the demand for energy through the following: (a) it allows consumers to access easier and cheaper loans of money to buy durable goods, such as cars, houses, refrigerators, washing machines, etc., which are large energy consumers that can affect the total energy demand of a country; (b) it allows businesses to access easier and less expensive financial capital, which can help create a new business or expand existing ones, such as buying or building more plants, employing more workers, and buying machinery and equipment [3; 4]. The economy, energy, and the environment are three important elements for the development of nations because the use of energy is vital to the world economy in the present and in the future. However, an increase in energy use generates increases in carbon dioxide (CO\({}_{2}\)) emissions, which cause environmental problems [5]. It would be expected that greater economic growth and economic development are related to higher levels of electricity and energy consumption in general; moreover, a greater amount of CO\({}_{2}\) emissions and resources from financial markets are required to fund economic development [6]. However, there are also authors who argue that financial development facilitates the reduction of energy consumption and CO\({}_{2}\) emissions [7], and also increases energy efficiency through the promotion of technological innovation and through the adoption of new technologies [8]. The financial sector plays an important role in the mobilization and use of savings, facilitation of transactions, and monitoring resources towards productive activities in developing countries, where an efficient financial sector is expected to increase overall economic efficiency and the process of growth [9]. In general terms, the impact of financial development on energy consumption depends on the efficiency of the total system, which includes the quality of work, capital, technology, conditions for investment, public policies of the government and institutions, etc., where the impact can be positive or negative, depending on whether economic growth occurs efficiently or not, that is, if less energy is consumed to produce more or the same level of production or not [10].