---

This study investigates the effect of oil price volatility on country risk index of Organization of Petroleum Exporting Countries (OPEC) members for the period 2002 to 2015.  We calculate oil price volatility by using an exponential autoregressive conditional heteroskedasticity (EGARCH) approach.  The impact of oil price volatility on country risk index in OPEC is estimated using a Markov switching model. The result indicate that oil price volatility has different effects on the risk index in different OPEC countries.  Oil price volatility has positive effect on country risk index for the United Arabic Emirates and Kuwait; negative effects for Qatar, Nigeria, Libya and; asymmetric effects  for Angola, Iraq, Saudi Arabia and Venezuela. Moreover, the study results indicate that oil price volatility has the most positive effects for the United Arabic Emirates, Iraq,  Saudi Arabia, Angola and the least positive impact for Kuwait and Venezuela. Furthermore, the lowest negative impact of oil price volatility on country risk index is seen for Iran and Iraq and the greatest negative impact for Qatar.  It is therefore recommended that planners, investors and others institutions pay attention to the country risk index and the likely impact of oil price volatility on it before investing in OPEC member countries.

---

In the present paper we study the effect of oil prices on the financial development index based on the banking network and the stock market for the period 1357-1396 by using the Markov Switching Model. The results show that if the financial development based on the stock market is in a low regime, the increase in oil prices is not a curse for financial development, with no significant effect either positive or negative while if it is  in a high regime, then oil income acts as a curse and reduces the financial development of the stock market. If the financial development index is in the middle regime, the increase in oil prices will not be a curse and will not reduce bank financial development. Also, the variables of trade openness and economic growth have different effects depending on the type of financial development regime. According to the research results, the increase in oil prices and revenues does not always lead to a decrease in the country’s financial development. The impact depends on the stability and speed of financial development.
JEL Classification: C34, E51, G21
Keywords: Resource Curse, Financial Development, Trade Openness, Economic Growth, Markov Switching Model