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The role of institutions in the effect of mining resources on financial development in WAEMU countries

Author

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  • Boukaré Maiga

    (University of Thomas SANKARA)

  • Omer S. Combary

    (University of Thomas SANKARA)

  • Youssoufou Hamadou Daouda

    (University of Tahoua)

Abstract

This study analyzes the effect of mining resources on financial development in WAEMU countries, focusing on the role of institutional quality between 1996 and 2016. Using a simultaneous equation model with a Three-Stage Least Squares approach (3SLS), the research empirically tests the hypothesis that mining resources positively impact financial development by enhancing institutional quality. However, the results indicate that mining resources negatively impact institutional quality, which in turn hampers financial development in the region. Thus, this suggests that mining resources, rather than improving financial development by enhancing institutional quality, undermine institutional strengths, which limits the potential for financial development. These results suggest promoting transparency in governance, including public disclosures of resource revenues and expenditures to enhance government accountability and reduce the risk of institutional quality degradation.

Suggested Citation

  • Boukaré Maiga & Omer S. Combary & Youssoufou Hamadou Daouda, 2025. "The role of institutions in the effect of mining resources on financial development in WAEMU countries," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 38(3), pages 601-624, September.
    • Handle: RePEc:spr:minecn:v:38:y:2025:i:3:d:10.1007_s13563-025-00510-0
    DOI: 10.1007/s13563-025-00510-0
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    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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