China's sustainable development perspective of financial development from the lens of geopolitical risk and resources extraction

Zhe Shi and Ying Li

Resources Policy, 2023, vol. 86, issue PA

Abstract: The progress of economic development is greatly improved by financial development, and one of the main sources that can be used to encourage the expansion of financial systems is the revenue obtained from the sale of natural resources. The current study analyzes China's nexus of natural resources and financial development from 1989 to 2021. The study also included geopolitical risk as an additional determinant of financial development. With different covariates of the dependent variable, we make available several reliable econometric methods for this study; for the unit root testing, the Augmented Dicky-Fuller test; for primary outputs, Auto Regressive Distributive Lags (ARDL) model is employed and for the robustness check analysis, Fully Modified Least Squares FMOLS, DOLS and CCR methods are provided. The outcomes exhibit that various rents of NRR have a negative and significant impact on financial expansion, exhibiting the resource curse hypothesis in China, while natural gas exhibits improve FD in China. Moreover, Geo-political risk has an insignificant but positive impact on financial development; therefore, GPR influence is inconclusive in both the short and long run. Robustness check results support the ARDL estimates, and the results are similar in all formats. The study provides policy implications regarding the nexus of FD and NRR.

Keywords: Financial development (FD); Natural resource rents (NRR); Geopolitical risk; ARDL; China (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:86:y:2023:i:pa:s0301420723010097

DOI: 10.1016/j.resourpol.2023.104298

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