## Financial Resource Curse in Resource-Rich Countries

_IMF Working Papers, July 19, 2017_

## Source details

**Canonical URL:** [Financial Resource Curse in Resource-Rich Countries](https://www.imf.org/en/publications/wp/issues/2017/07/19/financial-resource-curse-in-resource-rich-countries-44938)

## Other formats

- [Markdown version](/en/publications/wp/issues/2017/07/19/financial-resource-curse-in-resource-rich-countries-44938/index.md)
- [Structured JSON version](/en/publications/wp/issues/2017/07/19/financial-resource-curse-in-resource-rich-countries-44938/index.json)
- [Bundle manifest](/en/publications/wp/issues/2017/07/19/financial-resource-curse-in-resource-rich-countries-44938/bundle-manifest.json)

## Bibliographic details
- Authors: Montfort Mlachila, Rasmané Ouedraogo
- Published: July 19, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484310144.001

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### Summary and main finding
- Research question: Why do commodity-dependent developing countries have typically lower levels of financial development than their peers?
- Core argument: The main cause is shocks in commodity prices.
- Principal result: Strong evidence of a "financial development resource curse" operating through the channel of commodity price shocks, after controlling for other explanations found in the literature.
- Mitigation channel: The impact of these shocks can be mitigated through good quality of governance.

### Methodology and data
- Sample: 68 commodity-rich developing countries.
- Sample period: between 1980 and 2014.
- Empirical approach: Tests of the hypothesis controlling for other explanations proposed in the literature (specific methods and control variables are described in the paper).

### Robustness and scope
- Robustness checks reported:
  - Robust to different types of commodities.
  - Robust to the nature of the shocks.
  - Robust across various indicators of financial development.
- Financial development indicators referenced in subject keywords: Bank credit, Bank deposits, Financial sector development.

### Policy implications and recommendations
- Main policy implication: Strengthening quality of governance can mitigate the adverse effects of commodity price shocks on financial development.
- Policy focus areas implied by findings and keywords:
  - Governance improvements to reduce vulnerability to commodity price shocks.
  - Policies targeting financial sector resilience amid export concentration and price volatility.

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## Content in this bundle

- **Appendix I: Sample and Descriptive Statistics**
  - [Appendix I: Sample and Descriptive Statistics (Markdown version)](/-/media/files/publications/wp/2017/wp17163.pdf.md){rel="alternate" type="text/markdown"}
  - [Appendix I: Sample and Descriptive Statistics (PDF)](/-/media/files/publications/wp/2017/wp17163.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2017/07/19/financial-resource-curse-in-resource-rich-countries-44938_