Financial instability and oil price fluctuations: evidence from oil exporting developing countries

Brahim Gaies, Khaled Guesmi, Thomas Porcher, Raphael Boroumand
Authors registered in the RePEc Author Service: Thomas PORCHER and Khaled Guesmi

European Journal of Comparative Economics, 2020, vol. 17, issue 1, 55-71

Abstract: How financial market stability in oil exporting developing countries might be impacted by oil price fluctuations in the long term? The purpose of this paper is to answer this question. The present study is based on a sample including 35 net oil-exporting developing countries observed between 1987 and 2011. It mainly evidences that an increase in the oil world price can be advantageous for the domestic banking sector through reducing its fragility, measured by the likelihood of systemic banking crisis. To highlight this result, we estimate three logistic prediction crisis models: the random-effects logistic model, the conditional fixed-effects logistic model and the logistic population-averaged process with robust errors. Additionally, we examine the robustness of these estimations considering the changing interest and control variables and the sub-periods of crises. Our results show that an increase in the oil prices improve the stability of oil exporting financial markets and reduce the occurrence of their systemic banking crisis.

Keywords: Energy pricing; Financial markets; Crisis; Panel logit models; Oil prices (search for similar items in EconPapers)
JEL-codes: C1 E44 G15 Q43 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:liu:liucej:v:17:y:2020:i:1:p:55-71

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