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Ownership structure of oil revenues: Political institutions and financial markets in oil-producing countries

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  • Mohammed, Jabir Ibrahim
  • Fiador, Vera Ogeh
  • Karimu, Amin
  • Abor, Joshua Yindenaba

Abstract

This study examines the impact of the ownership structure of oil revenues on financial markets and institutions, and the intermediating role of political institutions. Using the fixed-effects model and GMM for robustness, we analyse data from 82 oil-producing countries. We find several key results. Firstly, government ownership of oil revenues undermines the efficiency of financial institutions when the quality of political institutions is weak, but enhances their efficiency when political institutions are strong. Secondly, the impact of private ownership of oil revenues is negative on the depth of and access to financial institutions when the quality of political institutions is weak, but positive when political institutions are strong. We observe similar threshold effects for the depth of and access to financial markets in the subsample of developing countries. We conclude that oil-producing countries need solid political institutions to benefit from oil wealth and to boost financial development.

Suggested Citation

  • Mohammed, Jabir Ibrahim & Fiador, Vera Ogeh & Karimu, Amin & Abor, Joshua Yindenaba, 2022. "Ownership structure of oil revenues: Political institutions and financial markets in oil-producing countries," Journal of Multinational Financial Management, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:mulfin:v:66:y:2022:i:c:s1042444x22000317
    DOI: 10.1016/j.mulfin.2022.100760
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    More about this item

    Keywords

    Ownership structure; Government oil revenues; Private oil revenues; Political institutions; Financial institutions and markets; International oil companies;
    All these keywords.

    JEL classification:

    • N2 - Economic History - - Financial Markets and Institutions
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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