Stock market resource curse: The moderating role of institutional quality

Adnan Ali, Suresh Ramakrishnan, Faisal Faisal, Hamid Ghazi H Sulimany and Ayman Hassan Bazhair

Resources Policy, 2022, vol. 78, issue C

Abstract: This study examines the impact of natural resources rents on the stock market and the role of institutional quality in managing resource revenues in shaping the stock market development utilizing data from 1991 to 2019 for G-7 economies. The current study employed the latest econometric techniques to exploit the moderating role of institutional quality in this nexus. The current study applied panel unit root with structural breaks to the envisaged variable. The results confirm the unique order of integration among the variables. Further, the Westerlund Panel cointegration is used that confirmed the long-run relationship among the variables. The long-run elasticities have been identified using the dynamic system GMM. This study found a positive effect of resources rent on the stock market and moderating role of institutional quality in enhancing the stock market resource blessing. Finally, Dumitrescu-Hurlin Causality analysis for possible causation is applied. The results depict that there is bidirectional causality between stock market development and economic growth, and moderating variable. This study recommends that since the stock market and banking system operate differently, a trade-off policy concerning institutional quality is needed to efficiently channel the windfall revenues through the financial system to protect the interest of different stakeholders. With the reinforcement and implementation of the efficient institutional framework, the natural resource revenues can further support stock market development.

Keywords: Stock market resource curse; Natural resources rents; Foreign direct investment; Economic growth; Institutional quality; GMM (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420722003737
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:78:y:2022:i:c:s0301420722003737

DOI: 10.1016/j.resourpol.2022.102929

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().