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Natural resources rents-financial development nexus: Evidence from sixteen developing countries

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  • Yıldırım, Seda
  • Gedikli, Ayfer
  • Erdoğan, Seyfettin
  • Yıldırım, Durmuş Çağrı

Abstract

Improving economic growth performance is largely dependent on financial development. Natural resource revenues are among the main sources that can be used in the development of financial systems. The aim of this study is to analyze the effects of each natural resource revenue on financial development in 16 developing countries (Albania, Argentina, Brazil, Bulgaria, China, Colombia, Georgia, Iran, Kazakhstan, Malaysia, Mexico, Peru, Romania, South Africa, Thailand, and Turkey) which gain different natural resources revenue using the data of 1994–2017 period. Panel cointegration analysis was used to investigate long-term relationships between series. Long-term relationships between the series were determined and then PMG and DFE methods were preferred to obtain long-term and short-term coefficients. Empirical results showed that an increase in oil revenues has a positive effect on financial development in the long term. However, in the short-term natural resources rents do not have an impact on financial development.

Suggested Citation

  • Yıldırım, Seda & Gedikli, Ayfer & Erdoğan, Seyfettin & Yıldırım, Durmuş Çağrı, 2020. "Natural resources rents-financial development nexus: Evidence from sixteen developing countries," Resources Policy, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:jrpoli:v:68:y:2020:i:c:s0301420719310323
    DOI: 10.1016/j.resourpol.2020.101705
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