Are natural resources a blessing or a curse for financial development in Pakistan? The importance of oil prices, economic growth and economic globalization

This paper investigates the linkage between natural resources and financial development by considering oil prices, economic growth and economic globalization as additional determinants in finance demand function for case of Pakistan over the period of 1972-2017. In doing so, we have applied long run covariability developed by Muller and Watson (2018) and robustness of empirical results is tested by applying cross-quantilogram introduced by Han et al. (2016). The empirical evidence reveals that natural resource abundance is positively correlated with financial development i.e. natural resources are blessing for financial development. Oil prices have positive effect on financial development. Economic growth has positive and significant impact on financial development. Contrarily, economic globalization hinders financial development. The empirical evidence indicates new insights for policy makers to use natural resources as economic tool to increases financial development for long run.