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

50 Pages Posted: 2 Mar 2017

See all articles by Thorsten Beck

Thorsten Beck

City University London - The Business School; Tilburg University - European Banking Center, CentER

Steven Poelhekke

University of Auckland

Multiple version iconThere are 4 versions of this paper

Date Written: February 23, 2017

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

JEL Classification: E20, F41, G20, O10, Q32, Q33

Suggested Citation

Beck, Thorsten and Poelhekke, Steven, Follow the Money: Does the Financial Sector Intermediate Natural Resource Windfalls? (February 23, 2017). De Nederlandsche Bank Working Paper No. 545, Available at SSRN: https://ssrn.com/abstract=2925754 or http://dx.doi.org/10.2139/ssrn.2925754

Thorsten Beck

City University London - The Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Steven Poelhekke (Contact Author)

University of Auckland ( email )

Auckland
New Zealand

HOME PAGE: http://https://sites.google.com/site/stevenpoelhekke/

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