FINANCIAL FRAGILITY IN RESOURCE-RICH HIGH-INCOME ECONOMIES

Purpose- The purpose of this study is to identify the economic, financial, and liberal factors affecting the financial fragility levels of resource-rich high-income economies and to analyze the interactions between these factors. Methodology-The methodology of the study includes a panel data analysis for the period 2006-2023. The research focuses on resource-rich high-income economies with a Gross Domestic Product (GDP) per capita exceeding $14,005 (based on the World Bank's Atlas method) and natural resource exports accounting for more than 25% of their total exports, according to TradeMap data. Findings- The analysis aimed at determining the financial fragility levels of resource-rich high-income economies revealed that improvements in the rule of law and judicial effectiveness positively impact the financial fragility index, thereby supporting financial stability. Similarly, government expenditures, broad money supply, and the asset size of deposit banks were also found to have a positive effect on the financial fragility index, contributing favorably to stability. However, increases in financial liberalization scores were observed to negatively affect the financial fragility index, weakening stability. Additionally, the lagged value of the financial fragility index showed a persistent effect on the current levels of fragility. Conclusion- Resource-rich high-income economies are distinguished not only by their vast natural resource reserves but also by their high-income levels and advanced economic structures. Ensuring sustainable financial stability in such economies necessitates adopting a holistic approach. Controlled implementation of financial liberalization, coupled with the establishment of adequate regulatory and supervisory mechanisms, can strengthen financial stability. Likewise, a robust rule of law and an effective judicial system can enhance the confidence of economic actors, contributing to reduced financial fragility. Effective and efficient management of public expenditures supports economic growth and resilience while ensuring the sustainability of these expenditures. Strengthening the banking sector's structure and aligning its size to contribute positively to economic stability can enhance the resilience of the financial system. In designing monetary supply policies, it is essential to manage risks such as inflationary pressures and asset bubbles while increasing liquidity. Policies should not only aim to reduce dependence on natural resources but also promote economic diversification, thereby supporting inclusive and sustainable growth. Keywords: Camel analysis, fragility, resource-rich economies, liberalization, panel data. JEL Codes: G00, G10, G15