The Impact of Financial Development on Innovation Activities in Emerging and Developing Countries

Kamilia Loukil

Business and Economic Research, 2020, vol. 10, issue 1, 112-119

Abstract: We investigate in this paper the effect of financial development on innovation in emerging and developing countries. The estimation of panel threshold model for a sample 54 countries during the period 1980-2009 shows the presence of non linear effects in the relationship between financial development and innovation. We find a threshold value of economic development below which the financial development level has no significant impact on innovation and above which financial development has a significant positive impact on innovation. In sum, our findings suggest that the presence of a healthy economic environment is crucial for financial institutions to offer high-quality financial services, promoting more innovation.

Keywords: Financial development; Innovation; Economic development; Threshold effects; Emerging and developing countries (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:mth:ber888:v:10:y:2020:i:1:p:112-119

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