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Financial sector in resource-dependent economies

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  • Kurronen, Sanna

Abstract

This paper examines financial sector characteristics in resource-dependent economies. Using an extensive data set covering 128 countries for the period 1995 to 2009, we present empirical evidence that the banking sector tends to be smaller in resource-dependent economies. Moreover, we locate a low threshold level at which the higher resource-dependence begins to be harmful for domestic banking sector. We also find evidence that the use of market-based financing is more common in resource-dependent economies. Further, our results suggest that a financial sector formed according to the needs of the resource sector might be unfavorable for emerging businesses, thereby hampering economic diversification and reinforcing the resource curse.

Suggested Citation

  • Kurronen, Sanna, 2015. "Financial sector in resource-dependent economies," Emerging Markets Review, Elsevier, vol. 23(C), pages 208-229.
    • Handle: RePEc:eee:ememar:v:23:y:2015:i:c:p:208-229
    DOI: 10.1016/j.ememar.2015.04.010
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    More about this item

    Keywords

    Resource dependence; Resource curse; Financial sector; Banks; Panel data;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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