Paper short abstract:

This paper encourages us to rethink the role of financial sectors in resource-rich authoritarian countries. Often dismissed because of their simplicity, this paper shows how the financial sectors serve a crucial role of regime maintenance in resource-rich autocracies.

Paper long abstract:

Increasing evidence point to a natural resource curse in finance with resource-rich countries suggested to be predisposed to financial underdevelopment. Existing studies generally fail to reflect on the variation within this group of countries nor do they acknowledge that the political economy of their financial sectors is more complex that often assumed. This paper seeks to fill this gap by exploring the political economy drivers of financial sector development in resource-dependent autocracies. The paper challenges prevailing assumption that rulers of these countries would be disinterested in advancing their financial sectors because of their abundant resource wealth. Rather, I argue that rulers of resource-rich autocracies also need political support to be able to maintain power and to accommodate political supporters in the long run, rulers must ensure a level of economic performance. This longer-term view also extends to the financial sector. The paper substantiates the argument by drawing on an in-depth case study of oil-rich Angola, Africa's third largest economy. Through a careful tracing of the causal processes underpinning the development of the country's financial sector since 1991, the paper shows that Angolan rulers have used the financial sector change in their bid to maintain political control, even promoted the development of the sector. As one of the first studies to take a political economy approach to the study of finance in resource-rich countries, the paper suggests a number of broader lessons for the study of the political economy of banking in the region and beyond.