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Nexus between financialisation and natural resources rents: Empirical evidence in a global sample

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  • Phuc Canh, Nguyen
  • Trung Thong, Nguyen

Abstract

Sustainable production and consumption are important goals of sustainable development. This study examines the relationships between natural resources rents and financialisation in a global sample. Nine indices from the Financial Development Index database of the International Monetary Fund are examined in the links with total natural resources rents in a global sample of 86 economies over the period 2002–2017. We find robust results by applying several econometric techniques for panel data. First, a strong mutual Granger causality exists between two variables, especially from financialisation to natural resources rents. Second, overall financial development appears to increase the natural resources rents through the positive influence of financial market depth. Meanwhile, financial institutions help reduce the natural resources rents, especially financial access and financial efficiency. By contrast, the increase in natural resources rents has positive effects on financial market depth but negative effects on financial institutions, and overall induces financial development. Third, evidence exists with regard to the long-term cointegration between financialisation and natural resources rents. The influence of financialisation on natural resources rents and the influence of natural resources rents on financialisation are confirmed in the long-run. Fourth, the links between financialisation and natural resources rents are found to be dominant in low- and middle-income economies and weak in high-income economies.

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  • Phuc Canh, Nguyen & Trung Thong, Nguyen, 2020. "Nexus between financialisation and natural resources rents: Empirical evidence in a global sample," Resources Policy, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:jrpoli:v:66:y:2020:i:c:s0301420719309201
    DOI: 10.1016/j.resourpol.2020.101590
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    More about this item

    Keywords

    Financial development; Financial institutions; Financial market; Natural resources; Rents;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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