Study On The Relationship Between Financial Development And Energy Consumption In The Process Of Industrialization And Urbanization In China

China's economy is now in the phase of steady growth, and industrialization and urbanization level are continuously improving. High-speed economic growth has brought a rapidly increasing in energy demand and the disturbing energy situation threatens China's economy. In addition, the fast rise in energy consumption has brought obvious negative impact to China's environment and it contradicts to the establishment of ecological civilization and environment friendly society. Therefore, in recent years, more and more scholars put their attention to energy consumption. In addition to the industrialization and urbanization, financial development becomes a new factor that affects energy consumption. The 18 th National Congress of Communist Party of China put forward that China should vigorously promote the "four modernizations" construction, deepen the reform of the financial system, and at the same time, control the total energy consumption. This requirement will undoubtedly bring a great challenge to China's social and economic development. So, this paper has important theoretical and practical significance to China's energy consumption.Based on the studies at home and abroad, and combination of relevant economic theory and the actual condition of China in recent years, this paper makes research hypothesis of the relationship between industrialization, urbanization financial development and energy consumption, respectively, and then analyzes the relationship between financial development and energy consumption in the process of industrialization and urbanization in China with the data from 1985-2013. First, this paper analyzes the dynamic relationship between three independent variables and energy consumption based on the VAR model, impulse response analysis and variance decomposition. Second, this paper studies the long-term relationship and short-term relationship between industrialization, urbanization, financial development and energy consumption through the VEC model. Finally, using the OLS model which including cross-terms, this paper analyzes the role of industrialization and urbanization in the relationship between financial development and energy consumption, and the path that factors impact on energy consumption. The main research results are as follows:(1) There is a long-term equilibrium relationship between industrialization, urbanization, financial development and energy consumption,and energy consumption will be amended 1.9% from the short-term disequilibrium to the long-term equilibrium.(2) The response of energy consumption to financial development is always positive in 6 forecast period,and the influence of financial development on energy consumption exists 2 periods lag effect. In the short run, energy consumption is positively to financial development,but in the long run, financial development and energy consumption shows significantly negative relationship. There is bidirectional Granger causality between financial development and energy consumption both in the short run and long run.(3) The response of energy consumption to industrialization is negative in the first four forecast period, and then into positive. The contribution of industrialization to energy consumption fluctuation decreases firstly, and then increases. Energy consumption is positively to industrialization in both long run and short run. Industrialization is the Granger cause of energy consumption in the long run, but in the opposite direction is not established.(4) The response of energy consumption to urbanization is negative in the first five forecast period, and then into positive. The contribution of urbanization to energy consumption fluctuation shows increasing trend on the whole. Energy consumption is positively to urbanization in both short run and long run. Urbanization is the Granger cause of energy consumption in the long run, but in the opposite direction is not established.(5) In the process of industrialization, financial development will exert impact on energy consumption by industrialization; financial development will strengthen the positive impact of industrialization on energy consumption and industrialization will weaken the direct effect of financial development on energy consumption. In the process of urbanization, financial development exerts impact on energy consumption by urbanization; financial development will strengthen the positive impact of urbanization on energy consumption and urbanization will weaken the direct effect of financial development on energy consumption. In the progress of industrialization and urbanization, industrialization will exert impact on energy consumption by urbanization; financial development and industrialization will strengthen the positive impact of urbanization on energy consumption, and urbanization will weaken the direct effect of financial development and urbanization on energy consumption.