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<p>This study examines whether natural resource wealth constrains financial development in India using annual data from 1971 to 2024. The analysis focuses on disaggregated coal, oil, and mineral rents and applies the Fourier–Shin cointegration approach along with Fourier-based Fully Modified Ordinary Least Squares and Canonical Cointegrating Regression estimators to account for gradual structural changes in the economy. The findings provide evidence consistent with the resource curse hypothesis, indicating that coal, oil, and mineral rents exert significant negative effects on financial development. These results suggest that resource revenues have not been effectively translated into financial deepening, which may reflect structural inefficiencies and volatility associated with commodity-based sectors. In contrast, economic growth and trade openness positively influence financial development, while inflation has a negative impact. Overall, the study highlights the importance of strengthening the linkage between resource revenues and financial development to support financial resilience and sustainable economic outcomes.</p>

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Managing resource wealth for financial sustainability: Do coal, oil and mineral rents constrain financial development?

  • 期刊论文

  • 发表日期：

    2026年5月16日

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  • Anam Ul Haq Ganie,
  • Mohd Rashid,
  • Suman Rani,
  • Akshu Hooda

摘要

This study examines whether natural resource wealth constrains financial development in India using annual data from 1971 to 2024. The analysis focuses on disaggregated coal, oil, and mineral rents and applies the Fourier–Shin cointegration approach along with Fourier-based Fully Modified Ordinary Least Squares and Canonical Cointegrating Regression estimators to account for gradual structural changes in the economy. The findings provide evidence consistent with the resource curse hypothesis, indicating that coal, oil, and mineral rents exert significant negative effects on financial development. These results suggest that resource revenues have not been effectively translated into financial deepening, which may reflect structural inefficiencies and volatility associated with commodity-based sectors. In contrast, economic growth and trade openness positively influence financial development, while inflation has a negative impact. Overall, the study highlights the importance of strengthening the linkage between resource revenues and financial development to support financial resilience and sustainable economic outcomes.