Follow the money: Does the Financial Sector Intermediate Natural Resource Windfalls?

Arbeitspapier

The need to absorb windfalls gains and manage them appropriately has been discussed extensively by academics and policy makers alike. We explore the role of the financial sector in intermediating these windfalls. Controlling for the level of financial development, inflation, GDP growth and country fixed-effects, we find a relative decline in financial sector deposits in countries that experience an unexpected natural resource windfall as measured by shocks to exogenous world prices. Moreover, we find a similar relative decline in lending, which is mostly due to the decrease in deposits. The smaller role for the financial sector in intermediating resource booms is accompanied by a stronger role of governments in channeling resources into the economy, mostly through higher government consumption.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 17-027/VIII

Classification and Topics

• Classification: Wirtschaft ; Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data) ; Open Economy Macroeconomics ; Financial Institutions and Services: General ; Economic Development: General ; Exhaustible Resources and Economic Development ; Resource Booms
• Subject: natural resources ; financial development ; banking

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Beck, Thorsten ; Poelhekke, Steven
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/162293
• Last update: 10.03.2025, 11:46 AM CET