The Perils of Production: The Impact of Oil and Gas Production on the Availability of Credit Open Access

Abstract

This paper tests the impact of higher levels of oil and gas production on the amount of credit that is available to private sector actors. It begins by reviewing the literature on financial development and the proverbial resource curse. After establishing a theoretical link between increased production and decreased supplies of credit, the paper proceeds to test this theory quantitatively and qualitatively. Using OLS regressions on a large-N dataset and confirming these findings on a smaller subset of countries, the relationship between oil and gas production and domestic credit is both negative and highly significant. Supplementing this analysis is a case study comparing Indonesia and Nigeria over time. Analysis shows that while Nigeria demonstrates much of what I propose, Indonesia deviates from expectations. Improvements to the theory are proposed that could strengthen its generalizability and ability to apply to a broader set of cases.

Table of Contents

Table of Contents

Section Page Numbers

Introduction........1

Literature Review........6

Institutions and Financial Development........6

The Politics and Interests of Financial Development..8

Resource Wealth and the Rentier State..........11

Hypothesis and Research Design..14

Hypotheses....14

Research Design....16

Statistical Analysis.......22

Summary and Descriptive Statistics....22

Regression Analysis: Production and Credit...26

Robustness Check...30

Case Study: Indonesia and Nigeria...............................36

Indonesia and Nigeria as Most-Similar Cases......37

Nigeria.....38

Indonesia.....46

Comparing the Cases...55

Improvements to My Theory......57

Conclusion...............59

Works Cited.............64

About this Honors Thesis

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School	Emory College
Department	International Studies
Degree	BA
Submission	Honors Thesis
Language	English
Research Field	Economics, General Political Science, General
Keyword	Resource Curse Resource Production Political Coalitions Oil and Gas Political Economy Oil Availability of Credit Development Institutions
Committee Chair / Thesis Advisor	Doner, Richard, Emory University
Committee Members	Reinhardt, Eric, Emory University Kim, Jong H, Emory University

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