Winner or loser? The asymmetric role of natural resource rents on financial development among resource-rich countries

Abstract

The resource curse theory has become a paradox that has been discussed for many years in the literature. Because most studies have revealed empirical evidence that resource rents negatively affect financial development although resource wealth provides many advantages. Therefore, studies on whether studies conducted with different methods in different periods can produce results contrary to this theory are continuing. This study aims to test the asymmetric effect of natural resource rents on financial development among resource-rich countries. The study investigated the data of 10 countries those have the highest natural resource rents in the World that selected from World Atlas (2018) for the period 1993-2017. As a result of empirical analysis, this study proved that there was a financial resource curse hypothesis among resource-rich countries. While positive shocks are effecting financial development negatively, negative shocks are found as effecting financial development positively. This study also showed that resource-rich countries are lucky but not a winner in the context of financial development and sustainable development.