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Resource abundance and financial development: Evidence from China

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  • Yuxiang, Karl
  • Chen, Zhongchang
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    Abstract

    In this paper, we extend the debate on the resource curse by focusing on a new mechanism. Theoretically, resource abundance may have a negative influence on financial development by impacting trade openness, the demand for financial reforms, social capital accumulation and productive investments. Using provincial panel data of China, the empirical analysis confirms such a negative link between mineral resource abundance and financial development. The resource-rich regions tend to have a slower pace of financial development than resource-poor ones. Since the positive relationship between financial development and long-run growth is also confirmed by the analysis, our findings suggest that financial development constitutes an important mechanism through which resource abundance can impact economic performance.

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    Bibliographic Info

    Article provided by Elsevier in its journal Resources Policy.

    Volume (Year): 36 (2011)
    Issue (Month): 1 (March)
    Pages: 72-79

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    Handle: RePEc:eee:jrpoli:v:36:y:2011:i:1:p:72-79

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    Web page: http://www.elsevier.com/locate/inca/30467

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    Cited by:
    1. Kolstad, Ivar & Wiig, Arne, 2012. "Testing The Pearl Hypothesis: Natural resources and trust," Resources Policy, Elsevier, vol. 37(3), pages 358-367.
    2. Blanco, Luisa & Grier, Robin, 2012. "Natural resource dependence and the accumulation of physical and human capital in Latin America," Resources Policy, Elsevier, vol. 37(3), pages 281-295.

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