Does transparency pay? Natural resources, financial development and the extractive industries transparency initiative (EITI)

Natural resources are known to hinder financial development in countries with weak institutions. We hypothesize that the Extractive Industries Transparency Initiative, an international norm aimed at promoting transparency in natural resource management, can mitigate this effect. Using fixed effects and entropy balancing methods, we provide empirical support for this hypothesis in a panel of 71 resource-rich countries between 1995 and 2019. Our results are robust to the use of alternative specifications and alternative measures of financial development. Finally, we provide a discussion of the transmission channels through which the financial resource curse may occur.