Resource Curse and Performance of Financial Institutions Nexus

Dear Colleagues,

Generally, the concept of the resource curse includes the utilization natural resources with mass consumption; in other words, the resource curse takes place when non-renewable resource-rich economies reach a point of stagnation. The concept of natural resources that may stifle a country’s economic development and financial growth is hard to accept for the majority due to the literature suggesting that natural resources will lead to money and wealth. Indeeed, in the 20th century, natural resource commerce was often seen as the biggest driver of growth and development, usually in high-income and resource-rich countries.

On the other hand, the resource curse concept may also lead to several issues in economic development. This problem is caused by an over-reliance on natural resources, which leads to a neglect of alternative sources of economic growth. Macro or small medium industries (SMI), unstable governance, and undeveloped financial systems are all symptoms of a classic resource trap. Most contradictory researchers suggest that middle, low-income, and resource-rich countries are victims rather than beneficiaries of natural resource abundance and that natural resources may not be favorable to growth and per capita income. In fact, the natural resource curse impacts not just certain headline economic statistics, but also the basic underpinning of economic progress by stifling financial expansion. Many studies have looked at the influence of natural resources on financial development from the standpoint of the financial system.

Nevertheless, limited studies have focused on the impact of the resource curse such as by measuring the commodity prices to the financial institutions’ performance. Extensive literature asserts that financial institutions are the backbone of every economy, providing financial services to investors and markets through several services, such as investment, loans, currency exchange, and deposits. The most common types of financial institutions include commercial banks, microfinance institutions (MFIs), insurance companies, etc.

In order to achieve optimum profit, financial institutions should be efficient and productive in utilizing and producing inputs and outputs. Financial institutions may experience inefficiency and regression in productivity when they produce too few outputs for the given inputs. This could also take place if they respond poorly to relative prices and produce too little of a high-priced output and too much of a low-priced output. Therefore, achieveing the main objective of efficiency and productivity represents a crucial component that requires improvement to ensure they could perform at the optimal level. Extensive prior research has examine the potential internal and external determinants that may influence financial institutions’ efficiency and productivity. Among banks’ internal determinants are size, credit risk, capitalization, market power, liquidity, overhead expenses, age, profitability, leverage, etc. Macroeconomic conditions or external determinants such as economic growth, inflation, market concentration ratio, and global financial crises could also influence efficiency.

Therefore, the main purpose of this Special Issue is to examine the influence of the resource curse on financial institutions’ performance specifically from the view of efficiency and productivity. Contributions to this Special Issue are expected to bring new knowledge and insights into this field, which will be of interest to a wide range of stakeholders, including governments, industry, and other policymakers. Areas of interest include (but are not limited to) the ones outlined in the keywords below.

Dr. Fakarudin Kamarudin
Dr. Hafezali Iqbal Hussain
Prof. Dr. Er Meng Joo
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

• green financial development
• renewable and non-renewable resources
• economic sustainability
• environmental sustainability
• financial development
• financial institutions
• sustainable development
• social impact performance
• banking sector
• microfinance Institutions
• natural resources
• country governance
• economics freedom
• globalization