Konferenzbeitrag

Do Natural Resource Revenues Hinder Financial Development? The Role of Political Institutions

We theoretically and empirically examine the relationship between natural resource revenues and financial development. In the theoretical part, we present a politico-economic model in which contract enforcement is low and decreasing in resource revenues when political institutions are poor, but high otherwise. As poor contract enforcement leads to low financial development, the model predicts that resource revenues hinder financial development in countries with poor political institutions, but not in countries with comparatively better political institutions. We test our theoretical predictions systematically using panel data covering the period 1970 to 2005 and 133 countries. Our estimates confirm our theoretical predictions. Our main results hold when we control country fixed effects, time varying common shocks, income and various additional covariates. They are also robust to alternative estimation techniques, various alternative measures of financial development and political institutions, as well as across different samples and data frequencies. We present further evidence using panel data covering the period 1870 to 1940 and 31 countries.

Language
Englisch

Bibliographic citation
Series: Proceedings of the German Development Economics Conference, Berlin 2011 ; No. 11

Classification
Wirtschaft
Subject
Natural resources
political institutions
financial development

Event
Geistige Schöpfung
(who)
Bhattacharyya, Sambit
Hodler, Roland
Event
Veröffentlichung
(who)
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
(where)
Kiel und Hamburg
(when)
2011

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Konferenzbeitrag

Associated

  • Bhattacharyya, Sambit
  • Hodler, Roland
  • ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft

Time of origin

  • 2011

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