Finance and Oil: Is There a Resource Curse in Financial Development?

European Banking Center Discussion Paper No. 2011-004

CentER Discussion Paper No. 2011-017

38 Pages Posted: 26 Feb 2011

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Date Written: January 25, 2011

Abstract

This paper shows that the finance and growth relationship is as important in resource-based economies as in other economies. This paper also documents less developed financial systems in resource-based economies and banks that are more liquid, better capitalized and more profitable, but give fewer loans to firms. Firms in resource-based economies use less external finance and a smaller share of them uses bank loans, although there is the same level of demand as in other countries, thus pointing to supply constraints. Overall, there is some indication of a natural resource curse in financial development, which falls more on enterprises than on households. This calls for intensified efforts in resource-based economies to deepen and broaden financial systems.

Keywords: Financial Development, Natural Resource Curse

JEL Classification: G10, G20, Q39

Suggested Citation

Beck, Thorsten, Finance and Oil: Is There a Resource Curse in Financial Development? (January 25, 2011). European Banking Center Discussion Paper No. 2011-004, CentER Discussion Paper No. 2011-017, Available at SSRN: https://ssrn.com/abstract=1769803 or http://dx.doi.org/10.2139/ssrn.1769803

Thorsten Beck (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

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