Natural resource abundance and financial development: A case study of emerging (E−15) economies

Abstract

Numerous studies have examined the impact of natural resources on economic growth. Researchers are using a novel proxy to assess the financial system's complexity, availability, and effectiveness for the first time. When it comes to financial and social growth, these factors were overlooked. An entirely new index for human capital is employed as a covariate in this study, which incorporates labor market information to gain corrected estimates of the returns to education for each nation. From 2000 to 2020, Emerging E−15 economies are the focus of this research. The findings show that natural resource rent has a negative impact on financial growth, confirming the presence of the resource curse hypothesis for the fifteen emerging economies (E15). On the other hand, investment in human capital has a favorable impact on financial development. The accessibility of trade in the Emerging E−15 economies is also proven to support financial growth. To better use the banking sector's natural resources, this research recommends improving require different resources and efficiency. To maximize natural resources, the financial industry should get more attention than the non-financial sector. The richness of natural resources may be used more efficiently if human capital is invested in the right areas.