The role of institutions in the effect of mining resources on financial development in WAEMU countries

Boukaré Maiga (), Omer S. Combary () and Youssoufou Hamadou Daouda ()
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Boukaré Maiga: University of Thomas SANKARA
Omer S. Combary: University of Thomas SANKARA
Youssoufou Hamadou Daouda: University of Tahoua

Mineral Economics, 2025, vol. 38, issue 3, No 8, 624 pages

Abstract: Abstract This study analyzes the effect of mining resources on financial development in WAEMU countries, focusing on the role of institutional quality between 1996 and 2016. Using a simultaneous equation model with a Three-Stage Least Squares approach (3SLS), the research empirically tests the hypothesis that mining resources positively impact financial development by enhancing institutional quality. However, the results indicate that mining resources negatively impact institutional quality, which in turn hampers financial development in the region. Thus, this suggests that mining resources, rather than improving financial development by enhancing institutional quality, undermine institutional strengths, which limits the potential for financial development. These results suggest promoting transparency in governance, including public disclosures of resource revenues and expenditures to enhance government accountability and reduce the risk of institutional quality degradation.

Keywords: Mining resources; Institutions; Financial development; WAEMU (search for similar items in EconPapers)
JEL-codes: F43 G21 O43 O55 Q34 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13563-025-00510-0

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