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Do disaggregated natural resources foster financial development? Evidence from linear and non-linear approaches

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  • Kumar, Nitish
  • Shaurav, Kumar

Abstract

The paper examines the aggregated total natural resources and disaggregated resources such as oil, gas and coal impact on financial development in India from 1970 to 2020 including the role of energy consumption and physical capital. For the analysis, the study utilizes the linear as well as non-linear Autoregressive Distributed Lag model and the Breitung-Candelon spectral causality test. The findings from the linear model illustrate those natural resources, whether considered in aggregate or disaggregated forms, play a significant role in financial development in both the long and short term. The non-linear autoregressive model, on the other hand, reveals that shocks in total natural resources, at both aggregated and disaggregated levels, have a significant positive impact on financial development. The causality analysis highlights that total natural resources, coal, oil, gas resources and physical capital have a long-term relationship with financial development, while energy consumption has a medium and short-term relationship with financial development. Our finding highlights the importance of studying natural resources for policy formulation. The study provides pragmatic insights for India, focusing on efficient resource management and its utilization, investment in critical infrastructure, and sustainable energy consumption for financial growth.

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  • Kumar, Nitish & Shaurav, Kumar, 2025. "Do disaggregated natural resources foster financial development? Evidence from linear and non-linear approaches," Resources Policy, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:jrpoli:v:103:y:2025:i:c:s0301420725001047
    DOI: 10.1016/j.resourpol.2025.105562
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