Do financial institutions and financial markets evenly influence natural resource and growth nexus in the caucasus and central Asia

Economic sustainability is among the utmost policy concerns for global economies, particularly for Caucasus and Central Asia (CCA) countries, which are confronting inhibitory economic growth due to the resource curse paradox. Financial development (FD) and its disaggregating factors, i.e., financial institutions (FI) and financial markets (FM), may distinctly contribute to economic growth. Therefore, this study scrutinizes the impact of FD, FM, FI, and natural resources (NR) on economic growth by utilizing the data from 1991 to 2022. This study employs the panel-correlated standard error (PCSE) approach to estimate the parameters. The overall results show that FD significantly promotes economic growth. The FD-related sub-components exert variant effects; FM encourages while FI impedes economic growth. In CAA countries, the insignificant coefficients of NR reveal that NR does not contribute to economic growth. In addition, the integrating terms of NR*FD, NR*FM, and NR*FI exhibit positive effects on economic growth by 0.024%, 0.016%, and 0.025%. It illustrates that countries with solid financial structures have enormous potential to reap the maximum benefits from abundant resources through efficient financial resource management. Moreover, the authentication of the estimated outcomes is confirmed through robustness analysis, and all the model variables have bidirectional causality.