Document Type : Research Paper
Authors
1 university of zabol
2 Zabol university
3 ferdowsi university of mashhad
Abstract
This paper examines the impact of natural resource rents on financial development in selected MENSA (Middle East and North Africa) countries from 2000 to 2022 using an ARAL panel model. The results indicate that, in the short term, rising natural resource rents negatively affect financial development, primarily due to an over-dependence on natural resource revenues and a decline in non-oil sectors. However, in the long term, the adverse effects of these rents are alleviated, suggesting that effective management of natural resource revenues and investment in financial infrastructure can bolster financial development. The research findings reveal that trade openness has a positive and significant influence on financial development. Expanding international trade and attracting foreign investment through access to new technologies enhances the financial performance of MENSA countries. Conversely, increasing urbanization negatively impacts financial development, as the pressure on government finances to address infrastructure and municipal service needs restricts investment opportunities in the financial sector. Overall, effective management of natural resource revenues, enhancement of governance quality, and investment in financial infrastructure mitigate the negative effects of natural resource rents on financial development. Trade openness also contributes positively to financial development, while rising urbanization adversely affects it due to the strain on government finances.
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