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Does natural resource curse in finance exist in Africa? Evidence from spatial techniques

Mira Nurmakhanova Orcid Logo, Mohamed Elheddad Orcid Logo, Abdelrahman J.K. Alfar, Alloysius Egbulonu Orcid Logo, Abedin Abedin

Resources Policy, Volume: 80, Start page: 103151

Swansea University Author: Abedin Abedin

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DOI (Published version): 10.1016/j.resourpol.2022.103151

Abstract

This paper aims to examine the relationship between financial development and natural resources. By using panel data of 20 selected African countries from 1995 to 2020, we investigate whether all types of financial development have the same relationship with natural resources. In doing so, a recentl...

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Published in: Resources Policy
ISSN: 0301-4207 1873-7641
Published: Elsevier BV 2023
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URI: https://cronfa.swan.ac.uk/Record/cronfa64248
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Abstract: This paper aims to examine the relationship between financial development and natural resources. By using panel data of 20 selected African countries from 1995 to 2020, we investigate whether all types of financial development have the same relationship with natural resources. In doing so, a recently developed novel estimation technique, spatial econometric, is employed for the first time to estimate the FD-NR relationship and account for the possible spillover effect of financial development in one country on the neighbouring countries. The novelty of this methodology is to consider structural breaks and the heterogeneity issues that are common in panel data. The main findings of this paper are that there is a robust negative effect of natural resource rents on both stock market capitalization ratio and available private credit. Furthermore, the empirical evidence suggests new insights for policymakers to use appropriate and sophisticated policies to boost the development of the financial sector in African countries over the long term. More policy implications are further discussed in this study.
Keywords: Natural resources, Financial development, Panel data, Spatial econometric techniques, Africa
College: Faculty of Humanities and Social Sciences
Start Page: 103151

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