Document Type : ORIGINAL ARTICLE
Authors
1 Department of Economic ,SR.C.,Islamic Azad University ,Tehran,Iran
2 Department of Economic,,SR.C.,Islamic Azad University,Tehran,Iran
Abstract
This study examines the threshold effects of the Human Development Index (HDI) and sustainable economic growth on the relationship between financial development and oil revenues in developing oil-exporting countries. Considering the central role of oil revenues in the economic structure of these countries and the importance of financial development in the optimal allocation of resources, analyzing this nonlinear relationship is of particular significance. To this end, panel data for selected oil-exporting countries in the Middle East, including Algeria, Bahrain, Egypt, Iraq, Iran, Jordan, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates, during the period 1995–2024 were used. Financial development is considered as the dependent variable, while oil revenues, economic growth, capital stock, trade openness, the Human Development Index, and the sustainable economic growth index are treated as explanatory variables. To identify nonlinear behaviors and threshold effects, the Panel Smooth Transition Regression (PSTR) model was employed. Prior to model estimation, the Levin–Lin–Chu panel unit root tests indicated stationarity of all variables at levels, and the Kao panel cointegration test confirmed the existence of a long-run equilibrium relationship among the variables. Moreover, the linearity test results rejected the linearity hypothesis, emphasizing the necessity of using the nonlinear PSTR model. The estimation results indicate that when the Human Development Index exceeds the estimated threshold, the effects of oil revenues, economic growth, capital stock, and trade openness on financial development are significantly strengthened.
Keywords
- Financial development
- oil revenues
- Human Development Index
- sustainable economic growth
- developing oil-exporting countries
Main Subjects
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