Abstract
The assimilation of natural resources to a “curse” or “blessing” cannot be analysed only from the side of the impact of resource endowments on economic growth as it was advocated by most of the previous studies. This paper aims to examine whether the financial development is dependent on varying effects of natural resource rents, human capital, economic and institutional factors. For this purpose, the study applied the quantile regression estimator for a panel of 10 countries during the period 1984–2016. The results reveal that natural resources rents have negative effects on financial development in countries with better-developed financial systems, while these effects are positive for countries with high natural resource income. Law and order, and human capital act positively on financial development regardless of the level of natural resources income. Our findings showed also that control of corruption has a positive influence on financial market development in countries with a developed financial sector. In the light of our empirical analysis, it also emerges that “the resource curse” hypothesis is rejected for countries with least-developed financial markets whatever their natural resource abundance.
•Restrictions on resource curse were found depending on financial development and natural resource income of countries.•Natural resource rents positively influence financial development only for countries with high natural resource income.•Natural resource rents influence differently the financial development components between high and low extreme quantiles.•Law and order and human capital act positively on financial development and its components.