RELATIONSHIP BETWEEN RURAL AREA'S ACCESS TO ELECTRICITY AND FINANCIAL DEVELOPMENT: THE CASE OF INDONESIA
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Keywords:Kırsal Nüfus, Enerji Yoksunluğu, Endonezya, FMOLS, DOLS, CCR
Indonesia is one of the most densely populated countries in the world, yet a significant portion of its people still lacks access to electricity. In this context, the current study focuses on examining the relationship between the rate of access to electrical energy and the financial development of the rural region in Indonesia during the period 1991-2019. The study has utilized the FMOLS (Modified Ordinary Least Squares Method), DOLS (Dynamic Ordinary Least Squares Method), and CCR (Canonical Cointegration) methods to estimate the long-term cointegration relationship coefficients between the variables in the established model. According to the empirical analysis of the model, which includes economic growth and the human capital index as control variables, the rate of access to electrical energy in the rural region has increased as a result of financial development, implying that energy deprivation in Indonesia's rural regions has decreased. Furthermore, improvements in economic growth and human capital index cause energy deprivation in these regions to decline. The findings show that financial development, human capital, and economic growth should be used as important policy tools in order to increase the welfare levels in rural areas, which is an important element of bottom-up development.
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