Resource abundance and financial development: Evidence from China

In this paper, we extend the debate on the resource curse by focusing on a new mechanism. Theoretically, resource abundance may have a negative influence on financial development by impacting trade openness, the demand for financial reforms, social capital accumulation and productive investments. Us...

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Bibliographic Details
Published in:Resources policy 2011-03, Vol.36 (1), p.72-79
Main Authors: Yuxiang, Karl, Chen, Zhongchang
Format: Article
Language:English
Subjects:
Abundance
China
China (People's Republic)
Coal industry
Economic analysis
Economic development
Economic performance
Empirical analysis
Financial analysis
Focusing
International trade
Investments
Links
Local government
Marketing
Mineral resources
Mining industry
Natural resources
Panel data
Social capital
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Summary:In this paper, we extend the debate on the resource curse by focusing on a new mechanism. Theoretically, resource abundance may have a negative influence on financial development by impacting trade openness, the demand for financial reforms, social capital accumulation and productive investments. Using provincial panel data of China, the empirical analysis confirms such a negative link between mineral resource abundance and financial development. The resource-rich regions tend to have a slower pace of financial development than resource-poor ones. Since the positive relationship between financial development and long-run growth is also confirmed by the analysis, our findings suggest that financial development constitutes an important mechanism through which resource abundance can impact economic performance.
ISSN:0301-4207
1873-7641
DOI:10.1016/j.resourpol.2010.05.002