‘The Financial Resources Curse’ Hypothesis in Iraq: Application of ARDL and NARDL Models

In this study, we investigate the relationship between financial development and natural resource rents, examining the 'Financial Resource Curse' hypothesis. This examination is conducted separately for the banking system, the stock market, and the overall financial system in Iraq. The study covers the period from ۱۹۹۰ to ۲۰۲۱ and utilizes annual data sourced from the World Bank. Our analysis employs ARDL and NARDL models to estimate the relationships between these variables, and the DOLS estimator is used to ensure the robustness of the results. Our findings reveal a significant, negative, and statistically significant effect of resource rents on the development of Iraq's banking sector and its financial system as a whole. This outcome supports the 'Financial Resource Curse' hypothesis for these sectors in Iraq during the study period. However, the relationship between resource rents and the stock market development index is not statistically significant, making it difficult to draw conclusions regarding the existence of the financial resource curse in the stock market. Furthermore, improved institutional quality had a positive and statistically significant impact on financial development in both the banking and stock market sectors of Iraq during the study period. The Corruption Index also shows a positive and statistically significant long run effect on banking sector development, supporting the Grease the Wheels Hypothesis. However, it has a negative impact on the development of the stock market and the financial system.

کلیدواژه ها:

Financial Development ، financial resource curse ، linear and nonlinear ARDL model ، Natural Resources