The value of the financial structure to economic performance in oil-producing countries

Is financial structure (FS) valuable to economic performance (EP) of countries? To answer this question, we investigated 23 oil-producing and 18 non-oil-producing countries over the course of ten years (2006-2015). We found an increase in bank-based FS decreases economic growth (EG) and amplifies growth volatility (GV) in the oil- and non-oil-producing economies. An increase in market-based FS increases EG in the two samples but amplifies GV in the oil-producing economies while dampening GV in the non-oil-producing countries. The uniqueness in our results is that between the oil- and non-oil-producing countries, where the relationship between FS and EP is negative, the negative effect is more in the oil-producing countries. Where the relationship is positive in the two samples, the positive effect is smaller in the oil-producing countries. We, therefore, recommend that any policy reforms in the oil-producing economies should be context-specific because oil-producing economies appear to differ from the other economies.