Financial Development and Natural Resources Dynamics in Saudi Arabia: Visiting ‘Resource Curse Hypothesis’ by NARDL and Wavelet-Based Quantile-on-Quantile Approach

Abstract

This study analyses the impact of natural resource rent on financial development to test the resource curse hypothesis in Saudi Arabia on quarterly data span from 1985Q1 to 2017Q4. We employ two novel methodologies at same time such as nonlinear autoregressive model (NARDL) and Wavelet-based quantile-on-quantile estimation to check the asymmetric behaviour of natural resource rent on financial development. The findings of NARDL confirm the nonlinear behaviour of natural resource rent with financial development. The results also show real GDP, gross capital formation and institutional quality affect financial development positively. The empirical results of Wavelet-based quantile-on-quantile estimation method also reveal the heterogeneous response of natural resource rent effect when decomposes into different quantiles that become positive to negative. The results further explain that the natural resource rent has a positive effect in short-run, but it exerts an adverse effect on financial development after attaining stability.

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

“…Specifically, Dwumfour and Ntow-Gyamfi (2018) find that in Africa, the impact of natural resource rents (Rents) on financial development is ambiguous and largely depends on the Financial Development indicators employed. Similar asymmetric behaviour of natural resource rent on financial development was reported by Chaudhry et al (2021) for Saudi Arabia.…”

Determinants of Tourism Arrivals in China

“…An approach for estimating unknown parameters in a linear regression model is called Ordinary least squared. Previous literature used different methods to prove different theories (Amjad et al, 2015;Aftab et al, 2015;Anwar et al, 2016;Chaudhry et al, 2019;Chaudhry et al, 2021;Faheem et al, 2019;Faheem et al, 2021;Farooq et al, 2021). The information is expressed in logarithm form for both dependent and independent variables.…”

Natural Resources, Institutional Quality and Financial Development in GCC Member Countries: Visiting ‘Resource Curse Hypothesis’ by DCCE Estimation

“…A glut of empirical literature investigated the association of natural resource with macroeconomic indicators, like natural resource and economic growth (Fum and Hodler, 2010;Alexeev and Chernyavskiy, 2015;Erum and Hussain, 2019;Atil et al,2020); inflation (Ouoba, 2016;Kim and Lin, 2017;Henri, 2019;Freeman et al, 2020;Chaudhry et al, 2021) unemployment ( Sjöberg et al, 2010;Kayode et al, 2014;Bagchi and Paul, 2018;Mukoka, 2020) trade balance (Vallejo, 2010;Gill et al, 2014;Harding and Venables, 2016;Tran et al, 2020); poverty (Barbier, 2010;Timilsina and Zilberman, 2016;Marchand and Weber, 2018); environment (Simon, 2010;Panayotou, 2016;Ding and Peng, 2018;Badeeb et al, 2020).…”