Investigating the Relationship between Oil Price Changes, Bank Credits and Health Sector Development: A Case Study of Selected Oil Exporting Countries

Subject Areas : -Health economy

Ali hamid Shati ghariri ¹ , hosein sharifi renani ² , Munaf Marza Neama Radi ³ , sara ghobadi ⁴

1 - PhD student in economics, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran
2 - Associate Professor of Economics, Isfahan Branch (Khorasgan), Islamic Azad University, Isfahan, Iran
3 - Assistant Professor of Economics, University of Al-Qadisiyah, Al-Diwaniyah, Iraq ,
4 - Assistant Professor of Economics, Isfahan Branch (Khorasgan), Islamic Azad University, Isfahan, Iran

Received: 2024-09-24 Accepted : 2024-10-30 Published : 2025-02-01

Keywords: Oil Price, Bank Loans, Health Sector, Selected Oil Exporting Countries.,

Abstract :

Introduction: Crude oil is one of the sources that provide the budget of oil exporting countries. In this regard, the changes and especially the decrease in the price of oil will directly put the financial affairs of the governments under a lot of pressure. Banking and its effectiveness from oil price changes can have an effect on the development of the healthcare sector. In this regard, the main goal of this research is to examine the relationship between oil price changes, bank credits and the development of the health and treatment sector in selected oil exporting countries.

Methods: For this purpose, the data of 12 OPEC member countries, including Iran, Iraq, Saudi Arabia, Kuwait, Venezuela, Libya, UAE, Algeria, Nigeria, Gabon, Guinea and Congo, have been used during the period from 2003 to 2023. The data analysis method is based on dynamic panel regression method (GMM).

Results: The findings of the research show that changes in oil prices lead to a decrease in investment in the healthcare sector and reduce the development of this sector. In addition, it was observed that changes in oil prices through the mechanism of reducing the amount of bank loans have also led to further weakening of the development of the healthcare sector in the countries under review.

Conclusion: Based on this, it is concluded that the direct effects of oil price changes and the indirect effects of reducing the volume of bank loans should be considered in the investigation of the factors affecting the development of the health and treatment sector in oil exporting countries.

References:

1- Stavros Degiannakis a d, George Filis “Oil price assumptions for macroeconomic policy”, Energy Economics, 2024; 17: 106425.
2- Rennan Kertlly de Medeiros a b, Edilean Kleber da Silva Bejarano Aragón b, Cássio da Nóbrega Besarria “Effects of oil market sentiment on macroeconomic variables”, Resources Policy, 2023; 83: 103642.
3- Salem Al Mustanyir. Government healthcare financing and dwindling oil prices: Any alternatives for OPEC countries?, Cogent Economics & Finance, 2024; 11: 1, 2166733, DOI: 10.1080/23322039.2023.2166733.
4- Keegan, C., Thomas, S., Normand, C., & Portela, C. Measuring recession severity and its impact on healthcare expenditure. International Journal of Health Care Finance and Economics, 2023; 13(2): 139–155. https://doi.org/10.1007/s10754-012-9121-2
5- Lindström, M., & Giordano, G. The 2008 financial crisis: Changes in social capital and its association with psychological wellbeing in the United Kingdom - A panel study. Social Science and Medicine, 2024; 153: 71–80. https://doi.org/10.1016/j.socscimed.2024.02.008.
6- OPEC. OPEC basket price; 2022. https://www.opec.org/ opec_web/ en/data_ graphs/ 40.htm
7- Mead, D., & Stiger, P. The plunge in import petroleum prices: What happened? US Bureau of Labor Statistics; 2024. https://www.bls.gov/opub/btn/ volume-4/pdf/the-2014-plunge-in-import-petroleum -prices-what-happened.pdf
8- World Bank. GDP (current US$); 2022. https://data.world bank.org/indicator/ NY. GDP.MKTP.CD
9- Ali, A. J. Volatility of oil prices and public spending in Saudi Arabia: Sensitivity and trend analysis. International Journal of Economics and Policy, 2021; 11(1): 165–172. https://doi.org/10.32479/ijeep.10601
10- Charfeddine, L., & Barkat, K. (2020). Short-and long-run asymmetric effect of oil prices and oil and gas revenues on the real GDP and economic diversification in oil-dependent economy. Energy Economics, 86 (Article), 104680. https://doi.org/10.1016/j.eneco. 2020.104680
11- Martinez, L. R. Natural resource rents, local taxes, and government performance: Evidence from Colombia. Working paper, University of Chicago; 2022.
12- Xiaojun Liu and Yunyuan Wang and Wanying Du and Yong Ma. “Economic policy uncertainty, oil price volatility and stock market returns: Evidence from a nonlinear model”, The North American Journal of Economics and Finance, 2022; 62: 101777.
13- Grossman, M. On the concept of health capital and the demand for health. Journal of Political Economy, 1972; 80(2): 223-255.
14- Bloom, D.E., Canning, D. The Health and Wealth of Nations. Science, 2020; 287(5456): 1207-1209.
15- Kilian, L., Murphy, D. The role of inventories and speculative trading in the global market for crude oil. Journal of Applied Econometrics, 2024; 29(3): 454-478.
16- Anyanwu, J.C., Erhijakpor, A.E.O. Health expenditure and health outcomes in Africa. African Development Review, 2019; 21(2): 400434.
17- Oduyemi, Gabriel/Owoeye, Taiwo. Oil price fluctuation and health outcomes in an oil exporting country: evidence from Nigeria. In: International Journal of Energy Economics and Policy, 2023; 10(4): S. 212 - 220. https://www. econjournals. com/index. php/ ijeep/article/download/9266/5123. doi:10.32479/ijeep.9266.
18- El Anshasy, A.A. Oil Prices and Economic Growth in Oilexporting Countries. United Arab Emirates: College of Business and Economics, United Arab Emirates University; 2022.
19- Kirigia, J.M., Nganda, B.M., Mwikisa, C.N., Cardoso, B. Effects of Global Financial Crisis on Funding for Health Development in Nineteen Countries of the WHO African Region, 2021; 11. BMC International Health and Human Rights. Available from: http://www. biomedcentral.com/1472-698X/11/4.
20- Burke, S., Thomas, S., Barry, S., & Keegan, C. Indicators of health system coverage and activity in Ireland during the economic crisis 2008–2014: From ‘more with less’ to ‘less with less’. Health Policy, 2024; 117(3): 275–278. https://doi.org/10.1016/j.healthpol. 2024.07.001
21- Karanikolos, M., Heino, P., McKee, M., Stuckler, D., & Legido-Quigley, H. Effects of the global financial crisis on health in high-income OECD countries: A narrative review. International Journal of Health Services, 2021; 46(2): 208–240. https://doi.org/10. 1177/0020731416637160
22- Pappa, E., Kontodimopoulos, N., Papadopoulos, A., Tountas, Y., & Niakas, D. Investigating unmet health needs in primary health care services in a representative sample of the Greek population. International Journal of Environmental Research and Public Health, 2023; 10(5): 2017–2027. https://doi.org/10. 3390/ijerph10052017
23- Barr, B., Taylor-Robinson, D., Scott-Samuel, A., McKee, M., & Stuckler, D. Suicides associated with the 2008-10 economic recession in England: Time trend analysis; 2022. BMJ, 345(aug13 2), e5142. https://doi.org/ 10.1136/bmj.e5142
24- Budhdeo, S., Watkins, J., Atun, R., Williams, C., Zeltner, T., & Maruthappu, M. Changes in government spending on healthcare and population mortality in the European Union, 1995–2010: A cross-sectional ecological study. Journal of the Royal Society of Medicine, 2023; 108(12): 490–498. https://doi.org/10.1177/ 0141076815600907
25- García Ruiz, A. J., García-Agua Soler, N., Martín Reyes, Á., & García Ruiz, A. J. (2019). Crisis, public spending on health and policy. Revista Espanola de Salud Publica, 93, e201902007. https://europepmc.org/article/med/ 30783077
26- Edney, L. C., Haji Ali Afzali, H., Cheng, T. C., & Karnon, J. Mortality reductions from marginal increases in public spending on health. Health Policy, 2020; 122(8): 892–899. https://doi.org/10.1016/j.healthpol.2022.04. 011
27- Sede, P. I., & Osifo, O. Impact of government healthcare financing on tuberculosis in Nigeria. Yobe Journal of Economics, 2022; 4(2): 93–105. https://www. researchgate.net/publication/325503445_IMPACT_OF_GOVERNMENT_HEALTHCARE_FINANCING_ON_ TUBERCULOSIS_IN_NIGERIA
28- Jakovljevic, M., Lamnisos, D., Westerman, R., Chattu, V. K., & Cerda, A. Future health spending forecast in leading emerging BRICS markets in 2030: Health policy implications. Health Research Policy and Systems, 2022; 20(1): 1–14. https://doi.org/10.1186/ s12961-022-00822-5
29- Grima, S., Spiteri, J. V., Jakovljevic, M., Camilleri, C., & Buttigieg, S. C. High out-of-pocket health spending in countries with a Mediterranean connection. Frontiers in Public Health, 2021; 6: 145. https:// doi.org/10.3389/fpubh.2021.00145
30- Loughnane, C., Murphy, A., Mulcahy, M., McInerney, C., & Walshe, V. Have bailouts shifted the burden of paying for healthcare from the state onto individuals? Irish Journal of Medical Science, 2019; 188(1): 5–12. https://doi.org/10.1007/s11845-018-1798-x
31- Johnston, B. M., Burke, S., Barry, S., Normand, C., Fhallúin, M. N., & Thomas, S. Private health expenditure in Ireland: Assessing the affordability of private financing of health care. Health Policy, 2019; 123 (10): 963–969. https://doi.org/10.1016/j.healthpol. 2019.08.002
32- Keane, C., Regan, M., & Walsh, B. (2021). Failure to take-up public healthcare entitlements: Evidence from the medical card system in Ireland.Social Science and Medicine, 281, 114069. Article 114069. https://doi.org/10.1016/j.socscimed.2021. 114069
33- Amiri, H., Sayadi, M., and Memipour, S. oil price shocks and macroeconomic consequences; New evidence from a scenario-based NK-DSGE analysis for oil exporting countries. Resource Policy, 2022; 74: 102262.
34- Adekoya, O.B., Oliyide, J.A., Noman, A. The volatility connectedness of the EU carbon market with commodity and financial markets in time- and frequency- domain: the role of the U.S. economic policy uncertainty. Resour. Pol, 2024; 74: 102252.
35- Chen, X., Li, Y., Xiao, J., Wen, F., Oil shocks, competition, and corporate investment: evidence from China. Energy Econ. 89, 104819. https://doi.org/10,1016/j. eneco; 2020: 104819.
36- Hossein Amiri, Mohammad Sayadi, Siab Mamipour. “Oil Price Shocks and Macroeconomic Outcomes; Fresh Evidences from a scenario-based NK-DSGE analysis for oil-exporting countries”, Resources Policy, 2021; 74: 102262.
37- Özge Sava‚sç‹n. "The Dynamics of Commodity Prices: A Clustering Approach", Department of Economics, University of North Carolina, Chapel Hil; 2019l.
38- Stavros Degiannakis a d, George Filis. “Oil price assumptions for macroeconomic policy”, Energy Economics, 2023; 117: 106425.
39- Sharma, P., Shrivastava, A. K., Rohatgi, S., & Mishra, B. B. Impact of macroeconomic variables on sustainability indices using ARDL model. Journal of Sustainable Finance & Investment; 2021: 1-17.
40- Jungho Baek a, Jee Hee Yoon. “Do macroeconomic activities respond differently to oil price shocks? New evidence from Indonesia”, Economic Analysis and Policy, 2022: 76: 862-852.
41- Esmaili, H. and Hadinejad, M. and Daman Kasha, M. and Nisabian, S. The effect of the uncertainty of economic policies and people's health on the surplus efficiency of companies in different quantiles, Health and Treatment Management Quarterly, 2024; 2(15).
42- Abdul Razzaq Matar, M. and Sharifi Renani, H. and Qasim Shendi, A. and Hafizi, B. The impact of healthcare spending on the stability of the banking sector considering the role of financial literacy and financial inclusion: a case study of selected oil countries, Health Management Quarterly, 2024; 1(15).
43- Hosseinzadeh, H and Shamsi Mohammadi, Maroufi. "Effect of oil shocks on macroeconomic variables in Iran", 4th annual international conference on new developments in management, economics and accountin; 2023.
44- Mehrara, M., Skui, M. The effect of oil price impulse on macroeconomic variables in the countries of the APEC geographical area: a panel structural vector autoregression approach. Geography quarterly (regional planning; 2021.
45- Doğan, F. İ. The impact of the oıl prıces on publıc and prıvate health expendıtures: empırıcal analysıs on mena countrıes. Aurum Sosyal Bilimler Dergisi, 2023; 2(2): 53-68.
46- Raguindin, Reyes. The Effects of Oil Price Shocks on the Philippine Economy: A VAR Approach. Cambridge: University of the Philippines School of Economics Working Paper; 2023.
47- Sachs, J.D., Warner, A.M. Natural resources and economic development: The curse of natural resources. European Economic Review, 2021; 42: 827-838
48- World Health Organization (WHO). Global health expenditure database; 2022. https://apps.who.int/nha/data base/Select/Indicators/en
49- OECD. OPEC countries; 2022: World population review. https:// worldpopulationreview. com/countryrankings/opec-countries.