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Is there a resource curse in financial development?: Empirical study on Middle East and North Africa

Fadly, Dalia LU (2013) EKHR92 20131
Department of Economic History
Abstract
This paper empirically investigates the impact of natural resource dependence and abundance on financial sector development in MENA for the period 1980-2009. The link established provides a new explanation for the different levels of financial development across the region, which may influence the pace of economic growth. Using fixed effect estimator, the model makes an explicit differentiation between resource abundance and dependence. We go beyond conventional measures of financial development and include other crucial aspects to the financial sector ; efficiency and stability to provide a holistic assessment of the financial sector. In addition, we include an institutional quality variable to evaluate if natural resource dependence... (More)
This paper empirically investigates the impact of natural resource dependence and abundance on financial sector development in MENA for the period 1980-2009. The link established provides a new explanation for the different levels of financial development across the region, which may influence the pace of economic growth. Using fixed effect estimator, the model makes an explicit differentiation between resource abundance and dependence. We go beyond conventional measures of financial development and include other crucial aspects to the financial sector ; efficiency and stability to provide a holistic assessment of the financial sector. In addition, we include an institutional quality variable to evaluate if natural resource dependence impacts financial development differently when institutions are of a better quality. Our main findings point to the sensitivity of banking size (especially private credit and M2) which is more adversely affected by dependence on oil rents than financial efficiency and stability for the whole region and to a larger extent in GCC countries. Moreover, better institutional quality of government plays an important role in changing the interacting relationship between resource dependence and financial sector development, as it reduces the unfavourable effect that resource dependence has on the size and soundness of the financial sector but no significant marginal effect on intermediaries stability (Less)
Please use this url to cite or link to this publication:
author
Fadly, Dalia LU
supervisor
organization
course
EKHR92 20131
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Financial development, Natural resources, Institutions, MENA
language
English
id
3878490
date added to LUP
2013-08-23 15:24:13
date last changed
2013-08-23 15:24:13
@misc{3878490,
  abstract     = {This paper empirically investigates the impact of natural resource dependence and abundance on financial sector development in MENA for the period 1980-2009. The link established provides a new explanation for the different levels of financial development across the region, which may influence the pace of economic growth. Using fixed effect estimator, the model makes an explicit differentiation between resource abundance and dependence. We go beyond conventional measures of financial development and include other crucial aspects to the financial sector ; efficiency and stability to provide a holistic assessment of the financial sector. In addition, we include an institutional quality variable to evaluate if natural resource dependence impacts financial development differently when institutions are of a better quality. Our main findings point to the sensitivity of banking size (especially private credit and M2) which is more adversely affected by dependence on oil rents than financial efficiency and stability for the whole region and to a larger extent in GCC countries. Moreover, better institutional quality of government plays an important role in changing the interacting relationship between resource dependence and financial sector development, as it reduces the unfavourable effect that resource dependence has on the size and soundness of the financial sector but no significant marginal effect on intermediaries stability},
  author       = {Fadly, Dalia},
  keyword      = {Financial development,Natural resources,Institutions,MENA},
  language     = {eng},
  note         = {Student Paper},
  title        = {Is there a resource curse in financial development?: Empirical study on Middle East and North Africa},
  year         = {2013},
}