Credit - inequality nexus: the role of natural resources

Abstract

This article offers a contribution to the understanding of the links between credit, inequality and natural resources, using panel data from 2002 to 2021 for 31 countries. A system-generalised method of moments was employed to determine the dynamic relationship between the variables of the study. The findings of the study suggest inequality and natural resources have a negative and significant relationship with credit. Higher inequality levels and natural resources rents are associated with a lower ratio of private credit to gross domestic product. The study offers an insight into the three pillars of sustainability, namely economic, social and environmental. It is essential for policymakers to integrate environmental factors such as natural resources in the relationships between inequality and the financial sector.