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Oil Rent, Geopolitical Risk and Banking Sector Performance

Author

Listed:
  • Naif Alsagr

    (Department of Business, Autonomous University of Barcelona, Spain,)

  • Stefan F. Van Hemmen Almazor

    (Department of Business, Centre for Entrepreneurship and Social Innovation Research, Autonomous University of Barcelona, Spain)

Abstract

This paper aims to assess and compare the impact of geopolitical risk (GPR) on the banking sector profitability of "oil and nonoil dependent" emerging markets. For empirical estimation, we used annual macro-level data of all the countries listed in the GPR index from the period 1998 to 2017. The results of the fixed effect model indicate a negative significant impact of GPR on banking sectors' profitability. Additionally, the results highlight the significant weakening moderation role of oil rent in the negative impact of GPR on the banking sector profitability. Multiple contributions arise from this study: Firstly, it explains and compares the impact of geopolitical risk on the banking sector profitability in non-oil-dependent. and oil-dependent economies. Secondly, our study sheds the light on the moderation effect of oil rent in the relationship between geopolitical risk and banking sector profitability. Indeed, the oil curse or blessing argument was neither revealed nor clarified in the relevant literature.

Suggested Citation

  • Naif Alsagr & Stefan F. Van Hemmen Almazor, 2020. "Oil Rent, Geopolitical Risk and Banking Sector Performance," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 305-314.
    • Handle: RePEc:eco:journ2:2020-05-36
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    3. Ngo, Vu Minh & Nguyen, Phuc Van & Hoang, Yen Hai, 2024. "The impacts of geopolitical risks on gold, oil and financial reserve management," Resources Policy, Elsevier, vol. 90(C).
    4. Shi, Zhe & Li, Ying, 2023. "China's sustainable development perspective of financial development from the lens of geopolitical risk and resources extraction," Resources Policy, Elsevier, vol. 86(PA).
    5. Yu, Jiangli & Wang, Shuo & Yang, Wantong, 2023. "Natural resources governance and geopolitical risks: A literature review and bibliometric analysis," Resources Policy, Elsevier, vol. 86(PA).
    6. Nisful Laila & Aam S. Rusydiana & Muhamad Iqbal Irfany & Imron HR & Popon Srisusilawati & Muhamad Taqi, 2021. "Energy Economics in Islamic Countries: A Bibliometric Review," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 88-95.
    7. Zhang, Yi & Zhang, Leilei & Yu, Hang & Tu, Yanhong, 2023. "Does Geopolitical risk drive natural resources extraction globally? A Case of Global," Resources Policy, Elsevier, vol. 82(C).
    8. Zouhaier Dhifaoui & Kaies Ncibi & Faicel Gasmi & Abulmajeed Abdallah Alqarni, 2023. "The Nexus between Climate Change and Geopolitical Risk Index in Saudi Arabia Based on the Fourier-Domain Transfer Entropy Spectrum Method," Sustainability, MDPI, vol. 15(18), pages 1-22, September.
    9. Liu, Xi & Zhang, Xueyong, 2024. "Geopolitical risk and currency returns," Journal of Banking & Finance, Elsevier, vol. 161(C).
    10. Fiorillo, Paolo & Meles, Antonio & Pellegrino, Luigi Raffaele & Verdoliva, Vincenzo, 2024. "Geopolitical risk and stock price crash risk: The mitigating role of ESG performance," International Review of Financial Analysis, Elsevier, vol. 91(C).
    11. Miaozhi Yu & Na Wang, 2023. "The Influence of Geopolitical Risk on International Direct Investment and Its Countermeasures," Sustainability, MDPI, vol. 15(3), pages 1-14, January.
    12. Phan, Dinh Hoang Bach & Tran, Vuong Thao & Iyke, Bernard Njindan, 2022. "Geopolitical risk and bank stability," Finance Research Letters, Elsevier, vol. 46(PB).
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    More about this item

    Keywords

    Geopolitical Risk; Banking Sector Profitability; Oil Rent; Oil Dependent; Nonoil Dependent; Emerging Markets.;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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