Financial Sector Development and Energy Poverty: Evidence from Eleven Southeast Asian Economies

This study investigates whether financial sector development, and, critically, which dimension of it, is associated with the dual energy transition across eleven Southeast Asian economies over 2004–2020. The empirical strategy combines Pooled OLS with Driscoll–Kraay standard errors, two-way fixed effects, Pooled Mean Group ARDL error correction, and Method-of-Moments quantile regression. The results reveal a stark asymmetry: the Financial Institutions Index is positively and robustly associated with clean cooking access across all estimators. Quantile regressions confirm that the FI association with clean cooking is significant across the entire distribution, with the largest coefficients at the lower quantiles. Sub-sample analysis reveals that the FI–clean cooking relationship is especially pronounced in the frontier Cambodia–Lao PDR–Myanmar–Vietnam–Timor-Leste group, where within-country fixed effects yield a coefficient of 257.54 (p < 0.01). Although these associations do not establish strict causality, the findings are consistent with prioritising deepening institutional banking and digital financial inclusion rather than equity-market development as the primary financial-sector channel associated with lower energy poverty in Southeast Asia, although such policy directions require further micro-level validation.