Does natural resource curse in finance exist in Africa? Evidence from spatial techniques

Mira Nurmakhanova, Mohamed Elheddad*, Abdelrahman J. K. Alfar, Alloysius Egbulonu, Mohammad Zoynul Abedin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)
13 Downloads (Pure)


This paper aims to examine the relationship between financial development and natural resources. By using panel data of 20 selected African countries from 1995 to 2020, we investigate whether all types of financial development have the same relationship with natural resources. In doing so, a recently developed novel estimation technique, spatial econometric, is employed for the first time to estimate the FD-NR relationship and account for the possible spillover effect of financial development in one country on the neighbouring countries. The novelty of this methodology is to consider structural breaks and the heterogeneity issues that are common in panel data. The main findings of this paper are that there is a robust negative effect of natural resource rents on both stock market capitalization ratio and available private credit. Furthermore, the empirical evidence suggests new insights for policymakers to use appropriate and sophisticated policies to boost the development of the financial sector in African countries over the long term. More policy implications are further discussed in this study.
Original languageEnglish
Article number103151
Number of pages8
JournalResources Policy
Early online date29 Nov 2022
Publication statusPublished - 25 Jan 2023


  • natural resources
  • financial development
  • panel data
  • spatial econometric techniques
  • Africa


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