Natural Resources Rent and Finance in the Presence of Corruption Control: An Asymmetric Approach

Abstract

This study empirically examines the nexus between natural resource rent and financial development in the context of the developing economy of Nigeria, between 1990 and 2021, by considering the important role of corruption control under an asymmetric approach. The study further looked at the influence of information technology, and renewable energy, on financial development. The bound test result confirms the existence of a long-term relationship among the variables. This study first uses the nonlinear autoregressive distributive lag (NARDL) model to capture the asymmetry that arises from positive or negative components of natural resource rent. The empirical evidence of the NARDL estimation shows that natural resource rent negatively influences financial development; meanwhile, corruption control boosts financial development and positively moderates this relationship in the Nigerian context. This confirms the existence of a natural resource curse. The results further explained that both information technology, renewable energy, and corruption control enhance financial development. Furthermore, the causality test discovers that there exists a bidirectional causal relationship between financial development and the scrutinized variables. These findings offer valuable policy recommendations for policymakers.