Financial Development, Diversification, and Resource Curse in GCC

Abderazak Bakhouche ()
Additional contact information
Abderazak Bakhouche: Higher Colleges of Technology

Chapter 3 in Banking in the GCC, 2026, pp 41-69 from Palgrave Macmillan

Abstract: Abstract This chapter examines the nexus between financialDiversification development and economic diversification in GCC countries from 1995 to 2021, with a focus on reducing resource dependency. The analysis considers the Financial Development Index (FDI) and its components—financial institutions and financial markets—and their sub-dimensions of depth, access, and efficiency. Results from IV-2SLS regressions reveal that financial development significantly promotes diversification by reducing natural resource rents. Financial institutions, particularly in terms of their access and depth, emerge as the most effective channels, facilitating resource reallocation to non-resource sectors. However, financial market efficiency remains positively associated with resource dependence, implying greater market sensitivity to hydrocarbon revenues. While GDP growth, inflation, and savings point to structural impediments to reducing resource dependence, governance and regulatory quality are significant enablers of diversification. The findings highlight the dual role of financial systems and institutional reforms in addressing the resource curse and enhancing sustainable economic transformation.

Date: 2026
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:pal:pmschp:978-3-032-21737-0_3

Ordering information: This item can be ordered from
http://www.palgrave.com/9783032217370

DOI: 10.1007/978-3-032-21737-0_3

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().