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Follow the Money: Does the Financial Sector Intermediate Natural Resource Windfalls?

Thorsten Beck () and Steven Poelhekke

No 6374, CESifo Working Paper Series from CESifo Group Munich

Abstract: The need to absorb windfalls gains and manage them appropriately has been discussed extensively by academics and policy makers alike. We explore the role of the financial sector in intermediating these windfalls. Controlling for the level of financial development, inflation, GDP growth and country fixed-effects, we find a relative decline in financial sector deposits in countries that experience an unexpected natural resource windfall as measured by shocks to exogenous world prices. Moreover, we find a similar relative decline in lending, which is mostly due to the decrease in deposits. The smaller role for the financial sector in intermediating resource booms is accompanied by a stronger role of governments in channeling resources into the economy, mostly through higher government consumption.

Keywords: natural resources; financial development; banking (search for similar items in EconPapers)
JEL-codes: E20 F41 G20 O10 Q32 Q33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg and nep-mac
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

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Working Paper: Follow the money: Does the financial sector intermediate natural resource windfalls? (2017) Downloads
Working Paper: Follow the money: Does the financial sector intermediate natural resource windfalls? (2017) Downloads
Working Paper: Follow the money: Does the financial sector intermediate natural resources windfalls? (2017) Downloads
Working Paper: Follow the money: Does the Financial Sector Intermediate Natural Resource Windfalls? (2017) Downloads
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