University of Tehran Iranian Economic Review 1026-6542 30 1 2026 03 01 ‘The Financial Resources Curse’ Hypothesis in Iraq: Application of ARDL and NARDL Models 101 139 96057 10.22059/ier.2024.367447.1007836 EN Majid Aghaei Faculty of Economics & Administrative Science, University of Mazandaran, Mazandaran, Iran Mahdieh Rezagholizadeh Faculty of Economics & Administrative Science, University of Mazandaran, Mazandaran, Iran Mohammad Abdi Seyyedkolaee Faculty of Economics & Administrative Science, University of Mazandaran, Mazandaran, Iran Rawa Mosavi Faculty of Economics & Administrative Science, University of Mazandaran, Mazandaran, Iran Journal Article 2023 10 31 In this study, we investigate the relationship between financial development and natural resource rents, examining the 'Financial Resource Curse' hypothesis. This examination is conducted separately for the banking system, the stock market, and the overall financial system in Iraq. The study covers the period from 1990 to 2021 and utilizes annual data sourced from the World Bank. Our analysis employs ARDL and NARDL models to estimate the relationships between these variables, and the DOLS estimator is used to ensure the robustness of the results. Our findings reveal a significant, negative, and statistically significant effect of resource rents on the development of Iraq's banking sector and its financial system as a whole. This outcome supports the 'Financial Resource Curse' hypothesis for these sectors in Iraq during the study period. However, the relationship between resource rents and the stock market development index is not statistically significant, making it difficult to draw conclusions regarding the existence of the financial resource curse in the stock market. Furthermore, improved institutional quality had a positive and statistically significant impact on financial development in both the banking and stock market sectors of Iraq during the study period. The Corruption Index also shows a positive and statistically significant long run effect on banking sector development, supporting the Grease the Wheels Hypothesis. However, it has a negative impact on the development of the stock market and the financial system. https://ier.ut.ac.ir/article_96057_170178b70a49f81c7f93f3d3423c22e4.pdf