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Investigating the nonlinear nexus between natural resources, digitization, economic policy uncertainty, and financial structure in Canada

Author

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  • Shahid Iqbal

    (Guangzhou University)

  • Mustafa Tevfik Kartal

    (European University of Lefke
    Korea University
    Azerbaijan State University of Economics (UNEC)
    Khazar University)

  • Xuetong Wang

    (Guangzhou University)

  • Sami Ullah

    (Northeast Petroleum University)

Abstract

The relationship between natural resource abundance and financial structure remains a contested issue, with the existing literature divided between the resource curse and resource blessing hypotheses. However, few studies examine how external macro-institutional factors shape this nexus. This study fills that gap by investigating how digitization (TNI), economic policy uncertainty (EPU), regulatory quality (RQ), and inflation (INF) influence the impact of natural resources (NRs) on financial structure, using Canada as a representative case of a developed, resource-rich economy. Quarterly data from 1990 to 2022 are analyzed using Wavelet Quantile Regression (WQR) and validated with Quantile-on-Quantile Regression (QQR) to account for asymmetries and nonlinearity. The results support the resource blessing hypothesis, indicating that natural resources have a positive impact on financial structure, particularly when complemented by digitization and policy stability. These findings suggest that Canada’s institutional capacity and digital transformation efforts enhance its ability to leverage natural wealth. The study recommends policies that integrate digital infrastructure and institutional quality improvements to strengthen financial systems in resource-dependent economies.

Suggested Citation

  • Shahid Iqbal & Mustafa Tevfik Kartal & Xuetong Wang & Sami Ullah, 2025. "Investigating the nonlinear nexus between natural resources, digitization, economic policy uncertainty, and financial structure in Canada," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-14, December.
    • Handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05849-x
    DOI: 10.1057/s41599-025-05849-x
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