Financial Economics
majid aghaei; Saeed Rasekhi; sara rangber
Abstract
Despite relative development in financial institutions, and the abundance of financial resources (income from oil sales), Iran has still struggled to experience high and sustainable economic growth rates, even facing negative growth rates in recent years. Therefore, investigating the influential factors ...
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Despite relative development in financial institutions, and the abundance of financial resources (income from oil sales), Iran has still struggled to experience high and sustainable economic growth rates, even facing negative growth rates in recent years. Therefore, investigating the influential factors in relationship between financial development and economic growth is crucial. Accordingly, this study examines the role and significance of oil resources (oil course) on the relationship between financial development and economic growth through investment channels using the ARDL bounding test during the period from 1980 to 2020. According to the research findings, financial development has a positive and significant impact on investment during the examined period, while the oil curse weakens this relationship and can indicate the indirect impact of the oil curse on the relationship between financial development and economic growth through investment channels in Iran. The interactive variable of financial development and the oil curse also had a negative and significant impact on investment during the examined period, indicating the financial system's inability to allocate resources effectively toward productive investments. Based on these results, it can be stated that the oil curse has affected the functioning of the financial sector in the Iranian economy and, by making this sector inefficient, has had a negative impact on investment, thus weakening the relationship between economic growth and financial development.
