Bakhtiar Javaheri; Khaled Ahmadzadeh; Homeyra Shahveisi
Abstract
The existence of efficient financial institutions, proper allocation of resources and financial development are the prerequisites for achieving desired economic growth and development. Therefore, it is necessary to identify the factors affecting the financial development of countries. This study ...
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The existence of efficient financial institutions, proper allocation of resources and financial development are the prerequisites for achieving desired economic growth and development. Therefore, it is necessary to identify the factors affecting the financial development of countries. This study examines the impact of natural resources and institutional quality on the financial development of developing countries over 2000-2016 using systemic GMM In this study, we used three indexes for financial development: the Financial Development Index (FDI) developed by IMF, the total credit provided by banks to the private sector as a share of GDP, and the Z-score index. The rent of natural resources is measured as a weighted average of income flows from oil, gas and minerals and Good Governance Indicators are used as measures of institutional quality. The results suggest that natural resources rents have a positive and significant effect on credit provided to the private sector and Financial Development Index, but threaten the stability of the banking sector. In addition, Institutional quality indicators also show a positive effect on three indicators of financial development.
Farshad Mo’meni; Farzaneh Samadian
Volume 13, Issue 50 , October 2013, , Pages 17-62
Abstract
This paper reviews the effects of institutions quality on the mechanisms that influence the turning of the blessing of oil resource revenues into a curse for Iranian economy and during 1973-2011. The main research question is that in a situation characterized by inefficient and malfunctioning institutions, ...
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This paper reviews the effects of institutions quality on the mechanisms that influence the turning of the blessing of oil resource revenues into a curse for Iranian economy and during 1973-2011. The main research question is that in a situation characterized by inefficient and malfunctioning institutions, the injection of oil revenue into the economy, how and through which channels, will cause resource curse to happen. This paper also shows that natural resources, like oil, don't lead to disasters per se; but this is the institutional-structural framework in a country and its interaction with the rents of oil revenues that can lead to the curse of natural resources. This study is a descriptive analysis and the analysis has been carried out by using Institutionalism Approach. According to the findings of this research, the negative effects of oil revenues in Iranian economy caused by inefficient and malfunctioning infrastructures and institutions, lead to short-run and long-run decrease in economic growth and resource curse finally. In Iran, oil revenue shows its immediate effect through fiscal policy and the government's budget (oil price effect on government expenditure) and then through budget deficit, it is related to the monetary sector of the economy (great impact of oil price on liquidity).So volatility of oil revenues and the rigidity of the government budget compared with the oil revenues is one of the main channels which the resource curse have been developed in Iran and caused to liquidity growth and inflation. It has important consequences such as increasing imports, decreasing non-oil export and increasing share of value added of services sector in GDP; the increase in the share of value added of services sector in GDP is such that the service sector (mainly brokerage and intermediary services) exceeds more than 50% of Iran's GDP.
