Investigating the asymmetric relationship between financial development and natural resources in the Iranian economy

Document Type : Research Paper


1 Department of Economics, Faculty of Literature and Humanities, Ilam University, Ilam, Iran

2 Department of Economics, Faculty of Literature and Humanities, Urmia University , Urmia, Iran


In order to promote the economic activities of a country, it needs a productive and healthy financial structure and financial development as the backbone of the country's economic development. The debate over the impact of natural resources and their impact on financial development has been an important area of ​​research over the past few decades. The present study examines the asymmetric relationship between financial development and natural resources by combining the variables of real GDP, capital, education, globalization and natural resources using annual data from 1979 to 2018.  In addition to the standard unit root test, this study uses a single root test with several structural failures. The Maki co-integration method is also used to determine the long-run relationship of up to 5 structural breaks. In addition, self-explanatory co-integration with wide nonlinear intervals is applied to determine the long-term asymmetric relationship between variables. Long-term results show the confirmation of the positive effect of natural resources with coefficients of 0.175 and 0.611 on financial development in long-term positive and negative shocks. In addition, education with a coefficient of 6.983 has a positive and significant effect on financial development in the long run, while GDP has a significant negative impact on financial development in the long run. Also, the existence of an asymmetric long-term and short-term relationship between natural resources and financial development has been confirmed. This shows that significant investment in the banking sector for Iran can affect the natural resources sector.


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