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The Impact of Financial Development and Governance on the Economic Vulnerability of OPEC Member Countries: A PCSE and FGLS Approach
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Mohammad Jafari   , Ali Hassanvand , Bahar Salarvand * |
| , Lorestan University , bahar.salarvand@gmail.com |
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Abstract: (8 Views) |
| This study examines the impact of financial development and governance on economic vulnerability in ten OPEC member countries over the period 2007–2020, using PCSE and FGLS econometric techniques. The findings indicate that financial development has a significant negative effect on economic vulnerability, meaning that increases in financial development substantially reduce vulnerability. Governance also has a negative but smaller effect, contributing to improved economic conditions. In contrast, government size and population density have positive and significant effects, increasing economic vulnerability. Financial openness and dependence on natural resource rents are also identified as factors that exacerbate vulnerability. Furthermore, the results reveal a nonlinear relationship between financial development and economic vulnerability, following a U-shaped pattern; at higher levels of financial development, its positive effect on vulnerability intensifies. Overall, improving governance quality and promoting financial development can help reduce economic vulnerability, whereas expanding government size, increasing population density, financial openness, and reliance on natural resource rents may worsen it. |
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| Keywords: Economic Vulnerability, Financial Development, Governance, Natural Resource Rents |
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Full-Text [PDF 1159 kb]
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Type of Study: Research |
Subject:
Special
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