Oil Rent, Financial Remittances and Banking Sector Development in Africa

Document Type : Research Paper

Authors

Department of Business Administration, Nile University of Nigeria, Abuja, Nigeria

10.22059/ier.2024.369610.1007884

Abstract

This study investigate the effect of oil rent and financial remittances on banking sector development in oil-exporting countries in Africa. Using a purposive sampling technique, this study selected the top ten (10) countries in Africa based on reported minimum daily production of 70,000 barrels per day (bpd). The study employed ARDL approach to cointegration and found that a short-run and long run relationship exists between oil rent and financial remittances on banking sector development. Specifically, in the long run, oil rent have a significant negative effect on banking sector development while financial remittance exerts significant positive effect on banking sector development. Thus, the study confirms that oil-exporting countries in Africa are affected by resource curse as revenue from oil haven’t been able to propel significant development in the banking sector.   The study recommends that oil-exporting countries could boost their levels of financial development by properly channeling windfalls from resource rents towards the development of other sectors.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 12 February 2024

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