Exploration reveals financial development declines with commodity price shocks in Suriname, indicating a financial resource curse with implications for fiscal policy.
Our study explores the impact of mineral resources on financial development in Suriname via a commodity-price-shock channel. Using a Structural VAR (SVAR) model and time series data from 1980 to 2021, we find evidence of a financial resource curse. More specifically, negative commodity price shocks undermine financial development by reducing bank lending and deposits, deteriorating bank asset quality, lowering bank profitability and widening the interest rate spread. The intensity of these effects largely depends on fiscal policy response, highlighting hence the important role of the latter in mitigating the financial implications of commodity price volatility.
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Huur et al. (2026) studied this question.
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