Iranian Economic Review

Iranian Economic Review

Oil Rent, Financial Remittances, and Banking Sector Development in Africa

Document Type : Research Paper

Authors
Lucas Okah Elumah
Adewale Muritala
Department of Business Administration, Nile University, Abuja, Nigeria.
10.22059/ier.2024.369610.1007884
Abstract
This paper analyzes how oil rents and incoming financial remittances influence banking sector advancement within oil-producing African nations. By employing a selective purposive sampling approach, we evaluate the top ten (10) African oil economies that maintain a baseline daily output of at least 70,000 barrels per day (bpd). Utilizing an Autoregressive Distributed Lag (ARDL) cointegration framework, the empirical findings demonstrate that oil rents and financial remittances maintain both short-run and long-run cointegrating dynamics with banking sector growth. Specifically, over the long term, oil rents exert a statistically significant adverse impact on banking development, whereas financial remittances exhibit a significant positive effect. These results validate the presence of the resource curse among African oil exporters, indicating that resource windfalls have historically failed to stimulate financial institutional depth. Accordingly, this study recommends that these nations establish structural mechanisms to redirect resource rents into broader economic sectors to foster holistic financial market maturity.
Keywords
banking sector development
developing economies
financial development
oil rent
remittances.
Subjects
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Iranian Economic Review
Volume 30, Issue 3
Summer 2026
Pages 1141-1161