Main Article Content

Solomon Prince Nathaniel
Department of Economics, University of Lagos
Nigeria
Vol. 10 No. 1 (2021), Articles, pages 30-45
DOI: https://doi.org/10.17979/ejge.2021.10.1.7202
Submitted: Dec 2, 2020 Accepted: Feb 23, 2021 Published: Jun 17, 2021
How to Cite

Abstract

Sustainable resource consumption is important for the development of the financial system. Besides, an advanced financial system eases the transfer of revenues from production activities and export to productive investments. The influence of natural resource (NR) abundance on financial development (FD) is still an ongoing debate with conflicting results. However, this study applies a novel proxy for FD, which measures the efficiency, accessibility, and depth of the financial market and institutions. Therefore, the current study is a maiden attempt to explore the nexus between FD and NR abundance amidst globalization, human capital, and economic growth in ASEAN economies. Reliable panel econometric techniques, including second-generation unit root tests, Westerlund (2007) cointegration tests, and the Augmented Mean Group (AMG) estimator are employed on the data for the period 1990-2017. The preliminary tests affirm the existence of cross-sectional dependence, unit root, and cointegrating relationship among the variables. The findings from the study reveal that NR abundance reduces FD, while globalization, human capital and economic growth add to FD. A feedback causality exists between NR abundance and FD. Thus, this study argues that more investment in the manufacturing sector will ease the attainment of efficiency in financial sector accessibility and benefits from NR abundance.

Downloads

Download data is not yet available.

Article Details

References

Adedoyin, F. F., Nathaniel, S., and Adeleye, N. (2020). An investigation into the anthropogenic nexus among consumption of energy, tourism, and economic growth: do economic policy uncertainties matter? Environmental Science and Pollution Research, 1-13. https://doi.org/10.1007/s11356-020-10638-x

Adeleye, B. N., Adedoyin, F., and Nathaniel, S. (2020). The criticality of ICT-trade nexus on economic and inclusive growth. Information Technology for Development, 1-21. https://doi.org/10.1080/02681102.2020.1840323

Ahmed, Z., and Wang, Z. (2019). Investigating the impact of human capital on the ecological footprint in India: An empirical analysis. Environmental Science and Pollution Research, 26(26), 26782-26796. https://doi.org/10.1007/s11356-019-05911-7

Ahmed, Z., Asghar, M. M., Malik, M. N., and Nawaz, K. (2020c). Moving towards a sustainable environment: The dynamic linkage between natural resources, human capital, urbanization, economic growth, and ecological footprint in China. Resources Policy, 67, 101677. https://doi.org/10.1016/j.resourpol.2020.101677

Ahmed, Z., Cary, M., and Le, H. P. (2021a). Accounting asymmetries in the long-run nexus between globalization and environmental sustainability in the United States: An aggregated and disaggregated investigation. Environmental Impact Assessment Review, 86, 106511. https://doi.org/10.1016/j.eiar.2020.106511

Ahmed, Z., Nathaniel, S. P., and Shahbaz, M. (2020a). The criticality of information and communication technology and human capital in environmental sustainability: Evidence from Latin American and Caribbean countries. Journal of Cleaner Production, 125529. https://doi.org/10.1016/j.eiar.2020.106511

Ahmed, Z., Wang, Z., Mahmood, F., Hafeez, M., and Ali, N. (2019). Does globalization increase the ecological footprint? Empirical evidence from Malaysia. Environmental Science and Pollution Research, 26(18), 18565-18582. https://doi.org/10.1007/s11356-019-05224-9

Ahmed, Z., Zafar, M. W., and Ali, S. (2020b). Linking urbanization, human capital, and the ecological footprint in G7 countries: An empirical analysis. Sustain. Cities Soc, 55, 102064. https://doi.org/10.1016/j.scs.2020.102064

Ahmed, Z., Zhang, B., and Cary, M. (2021b). Linking economic globalization, economic growth, financial development, and ecological footprint: Evidence from symmetric and asymmetric ARDL. Ecological Indicators, 121, 107060. https://doi.org/10.1016/j.ecolind.2020.107060

Apergis, N., and Payne, J. E. (2014). The oil curse, institutional quality, and growth in MENA countries: Evidence from time-varying cointegration. Energy Economics, 46, 1-9. https://doi.org/10.1016/j.eneco.2014.08.026

Asif, M., Khan, K. B., Anser, M. K., Nassani, A. A., Abro, M. M. Q., and Zaman, K. (2020). Dynamic interaction between financial development and natural resources: Evaluating the ‘Resource curse’hypothesis. Resources Policy, 65, 101566. https://doi.org/10.1016/j.resourpol.2019.101566

Auty, R., (1993). Sustaining Development in Mineral Economies: The Resource Curse Thesis. Routledge, London.

Badeeb, R. A., Lean, H. H., and Clark, J. (2017). The evolution of the natural resource curse thesis: A critical literature survey. Resources Policy, 51, 123-134. https://doi.org/10.1016/j.resourpol.2016.10.015

Beck, T. (2002). Financial development and international trade: Is there a link? Journal of international Economics, 57(1), 107-131. https://doi.org/10.1016/S0022-1996(01)00131-3

Behbudi, D., Mamipour, S., and Karami, A. (2010). Natural resource abundance, human capital and economic growth in the petroleum exporting countries. Journal of Economic Development, 35(3), 81. https://doi.org/10.35866/caujed.2010.35.3.004

Bhattacharyya, S., and Hodler, R. (2014). Do natural resource revenues hinder financial development? The role of political institutions. World Development, 57, 101-113. https://doi.org/10.1016/j.worlddev.2013.12.003

Bond, S., and Eberhardt, M. (2013). Accounting for unobserved heterogeneity in panel time series models. University of Oxford.

Bravo-Ortega, C., and De Gregorio, J. (2005). The relative richness of the poor? Natural resources, human capital, and economic growth. The World Bank. https://doi.org/10.1596/1813-9450-3484

Chudik, A., Mohaddes, K., Pesaran, M. H., and Raissi, M. (2016). Long-run effects in large heterogeneous panel data models with cross-sectionally correlated errors. Emerald Group Publishing Limited. https://doi.org/10.1108/S0731-905320160000036013

Dogan, E., Ulucak, R., Kocak, E., and Isik, C. (2020). The use of ecological footprint in estimating the Environmental Kuznets Curve hypothesis for BRICST by considering cross-section dependence and heterogeneity. The Science of the Total Environment, 723, 138063. https://doi.org/10.1016/j.scitotenv.2020.138063

Dumitrescu, E. I., and Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic modelling, 29(4), 1450-1460. https://doi.org/10.1016/j.econmod.2012.02.014

Dwumfour, R. A., and Ntow-Gyamfi, M. (2018). Natural resources, financial development and institutional quality in Africa: Is there a resource curse? Resources Policy, 59, 411-426. https://doi.org/10.1016/j.resourpol.2018.08.012

Gokmenoglu, K. K., and Rustamov, B. (2019). Examining the World Bank Group lending and natural resource abundance induced financial development in KART countries. Resources Policy, 63, 101433. https://doi.org/10.1016/j.resourpol.2019.101433

Guan, J., Kirikkaleli, D., Bibi, A., and Zhang, W. (2020). Natural resources rents nexus with financial development in the presence of globalization: is the “resource curse” exist or myth? Resources Policy, 66, 101641. https://doi.org/10.1016/j.resourpol.2020.101641

Gylfason, T. (2001). Natural resources, education, and economic development. European economic review, 45(4-6), 847-859. https://doi.org/10.1016/S0014-2921(01)00127-1

Hatemi-J, A., and Shamsuddin, M. (2016). The causal interaction between financial development and human development in Bangladesh. Applied Economics Letters, 23(14), 995-998. https://doi.org/10.1080/13504851.2015.1128066

Humphreys, M., Sachs, J. D., Stiglitz, J. E., Soros, G., and Humphreys, M. (2007). Escaping the resource curse. Columbia University Press.

International Monetary Fund (IMF) (2019). World Economic Outlook Database, October 2019. Retrieved 11 October 2019.

International Monetary Fund (IMF) (2016). Introducing a new broad‐based index of financial development, IMF Working Paper WP/16/5. https://data.imf.org/?sk=388dfa60-1d26-4ade-b505-a05a558d9a42

Kassouri, Y., and Altıntaş, H. (2020). Human well-being versus ecological footprint in MENA countries: A trade-off? Journal of Environmental Management, 263, 110405. https://doi.org/10.1016/j.jenvman.2020.110405

Khan, Z., Hussain, M., Shahbaz, M., Yang, S., and Jiao, Z. (2020). Natural resource abundance, technological innovation, and human capital nexus with financial development: a case study of China. Resources Policy, 65, 101585. https://doi.org/10.1016/j.resourpol.2020.101585

Li, Z. Z., Li, R. Y. M., Malik, M. Y., Murshed, M., Khan, Z., and Umar, M. (2020). Determinants of carbon emission in China: how good is green investment? Sustainable Production and Consumption, 27, 392-401. https://doi.org/10.1016/j.spc.2020.11.008

Marchand, J. T., and Weber, J. (2015). The labor market and school finance effects of the Texas shale boom on teacher quality and student achievement (No. 2015-15). University of Alberta, Department of Economics.

Mehlum, H., Moene, K., and Torvik, R. (2006). Cursed by resources or institutions? World Economy, 29(8), 1117-1131. https://doi.org/10.1111/j.1467-9701.2006.00808.x

Meo, M. S., Nathaniel, S. P., Khan, M. M., Nisar, Q. A., and Fatima, T. (2020b). Does Temperature Contribute to Environment Degradation? Pakistani Experience Based on Nonlinear Bounds Testing Approach. Global Business Review, 0972150920916653. https://doi.org/10.1177/0972150920916653

Meo, M., Nathaniel, S., Shaikh, G., and Kumar, A. (2020a). Energy consumption, institutional quality and tourist arrival in Pakistan: Is the nexus (a) symmetric amidst structural breaks? Journal of Public Affairs, e2213. https://doi.org/10.1002/pa.2213

Murshed, M. (2020). An empirical analysis of the non-linear impacts of ICT-trade openness on renewable energy transition, energy efficiency, clean cooking fuel access and environmental sustainability in South Asia. Environmental Science and Pollution Research, 27(29), 36254-36281. https://doi.org/10.1007/s11356-020-09497-3

Murshed, M., Abbass, K., and Rashid, S. (2020a). Modelling renewable energy adoption across south Asian economies: Empirical evidence from Bangladesh, India, Pakistan and Sri Lanka. International Journal of Finance & Economics. https://doi.org/10.1002/ijfe.2073

Murshed, M., Nurmakhanova, M., Elheddad, M., and Ahmed, R. (2020b). Value addition in the services sector and its heterogeneous impacts on CO 2 emissions: revisiting the EKC hypothesis for the OPEC using panel spatial estimation techniques. Environmental Science and Pollution Research, 27(31), 38951-38973. https://doi.org/10.1007/s11356-020-09593-4

Nasir, M. A., Huynh, T. L. D., and Tram, H. T. X. (2019). Role of financial development, economic growth & foreign direct investment in driving climate change: A case of emerging ASEAN. Journal of environmental management, 242, 131-141. https://doi.org/10.1016/j.jenvman.2019.03.112

Nathaniel, S. P. (2021). Environmental degradation in ASEAN: assessing the criticality of natural resources abundance, economic growth and human capital. Environmental Science and Pollution Research, 1-13. https://doi.org/10.1007/s11356-020-12034-x

Nathaniel, S. P., Nwulu, N., and Bekun, F. (2020a). Natural resource, globalization, urbanization, human capital, and environmental degradation in Latin American and Caribbean countries. Environmental Science and Pollution Research, 1-15.

Nathaniel, S. P., Omojolaibi, J. A., and Ezeh, C. J. (2020b). Does stock market-based financial development promotes economic growth in emerging markets?: New evidence from Nigeria. Serbian Journal of Management, 15(1), 45-54. https://doi.org/10.5937/sjm15-17704

Nathaniel, S. P., Yalçiner, K., and Bekun, F. (2020c). Assessing the environmental sustainability corridor: Linking natural resources, renewable energy, human capital, and ecological footprint in BRICS. Resources Policy, 1-13. https://doi.org/10.1016/j.resourpol.2020.101924

Nathaniel, S., and Khan, S. A. R. (2020). The Nexus between Urbanization, Renewable Energy, Trade, and Ecological Footprint in ASEAN Countries. Journal of Cleaner Production, 122709. https://doi.org/10.1016/j.jclepro.2020.122709

Nathaniel, S., Aguegboh, E., Iheonu, C., Sharma, G., and Shah, M. (2020d). Energy consumption, FDI, and urbanization linkage in coastal Mediterranean countries: re-assessing the pollution haven hypothesis. Environmental Science and Pollution Research, 27(28), 35474-35487. https://doi.org/10.1007/s11356-020-09521-6

Nathaniel, S. P., Omojolaibi, J. A., and Ezeh, C. J. (2020e). Does stock market-based financial development promotes economic growth in emerging markets?: New evidence from Nigeria. Serbian Journal of Management, 15(1), 45-54. https://doi.org/10.5937/sjm15-17704

Nawaz, K., Lahiani, A., and Roubaud, D. (2019). Natural resources as blessings and finance-growth nexus: A bootstrap ARDL approach in an emerging economy. Resources Policy, 60, 277-287. https://doi.org/10.1016/j.resourpol.2019.01.007

Omojolaibi, J., and Nathaniel, S., P. (2020). Assessing the potency of environmental regulation in maintaining environmental sustainability in MENA countries: An advanced panel data estimation. Journal of Public Affairs, e2526. https://doi.org/10.1002/pa.2526

Pesaran, M. H. (2004). General diagnostic tests for cross-section dependence in panels. Fac. Econ. https://doi.org/Doi.org/10.17863/CAM.5113

Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. J. Appl. Econom. 22, 265-312. https://doi.org/10.1002/jae.951

Rajan, R. G., and Zingales, L. (2003). The great reversals: the politics of financial development in the twentieth century. Journal of financial economics, 69(1), 5-50. https://doi.org/10.1016/S0304-405X(03)00125-9

Redmond, T., and Nasir, M. A. (2020). Role of natural resource abundance, international trade and financial development in the economic development of selected countries. Resources Policy, 66, 101591. https://doi.org/10.1016/j.resourpol.2020.101591

Rickman, D. S., Wang, H., and Winters, J. V. (2017). Is shale development drilling holes in the human capital pipeline? Energy Economics, 62, 283-290. https://doi.org/10.1016/j.eneco.2016.12.013

Saint Akadırı, S., Alola, A. A., and Usman, O. (2021). Energy mix outlook and the EKC hypothesis in BRICS countries: a perspective of economic freedom vs. economic growth. Environmental Science and Pollution Research, 1-5. https://doi.org/10.1007/s11356-020-11964-w

Shahbaz, M., Naeem, M., Ahad, M., and Tahir, I. (2018a). Is natural resource abundance a stimulus for financial development in the USA? Resources Policy, 55, 223-232. https://doi.org/10.1016/j.resourpol.2017.12.006

Shahbaz, M., Nasir, M. A., and Roubaud, D. (2018b). Environmental degradation in France: the effects of FDI, financial development, and energy innovations. Energy Economics, 74, 843-857. https://doi.org/10.1016/j.eneco.2018.07.020

Sibel, B. E., Kadir, Y. E., and Ercan, D. (2015). Local financial development and capital accumulations: Evidence from Turkey. Panoeconomicus, 62(3), 339-360. https://doi.org/10.2298/PAN1503339E

Sun, Y., Ak, A., Serener, B., and Xiong, D. (2020). Natural resource abundance and financial development: A case study of emerging seven (E− 7) economies. Resources Policy, 67, 101660. https://doi.org/10.1016/j.resourpol.2020.101660

Tiba, S., and Frikha, M. (2019). The controversy of the resource curse and the environment in the SDGs background: The African context. Resources Policy, 62, 437-452. https://doi.org/10.1016/j.resourpol.2019.04.010

Ulucak, R., and Khan, S. U. D. (2020). Does information and communication technology affect CO2 mitigation under the pathway of sustainable development during the mode of globalization? Sustainable Development. https://doi.org/10.1002/sd.2041

Umar, M., Ji, X., Kirikkaleli, D., Shahbaz, M., and Zhou, X. (2020). Environmental cost of natural resources utilization and economic growth: Can China shift some burden through globalization for sustainable development? Sustainable Development, 28(6), 1678-1688. https://doi.org/10.1002/sd.2116

Westerlund, J. (2007). Error correction based panel cointegration tests. Oxford Bulletin of Economics and Statistics, 69, 709-748. https://doi.org/10.1111/j.1468-0084.2007.00477.x

World Bank (2017). World Bank Lending: Fiscal 2017. The World Bank Group. Retrieved from the World Bank. Website: http://pubdocs.worldbank.org/.

World Development Indicator (WDI) (2019). World Bank Development Indicators database (online) available at https://data.worldbank.org/ Accessed date 24.10.2019.

Xu, X., Xu, X., Chen, Q., and Che, Y. (2016). The research on generalized regional “resource curse” in China's new normal stage. Resources Policy, 49, 12-19. https://doi.org/10.1016/j.resourpol.2016.04.002

Yu, A., Jia, Z., Zhang, W., Deng, K., and Herrera, F. (2020). A Dynamic Credit Index System for TSMEs in China Using the Delphi and Analytic Hierarchy Process (AHP) Methods. Sustainability, 12(5), 1715. https://doi.org/10.3390/su12051715

Zaidi, S. A. H., Wei, Z., Gedikli, A., Zafar, M. W., Hou, F., and Iftikhar, Y. (2019). The impact of globalization, natural resources abundance, and human capital on financial development: Evidence from thirty-one OECD countries. Resources Policy, 64, 101476. https://doi.org/10.1016/j.resourpol.2019.101476