Economics of institutional quality in the nexus of innovation, technology, and financial market development: international evidence

Peng Zhou, Ming Su and Yang Zheng

Applied Economics Letters, 2025, vol. 32, issue 5, 715-720

Abstract: Over the past two decades, rapid innovation and technological advancements have presented significant challenges to the financial sector, which underpins overall economic growth. This study investigates the moderating role of institutional quality in the relationship between innovation, technology, and financial market development, using a global sample of 141 countries from 2006 to 2019. The empirical findings demonstrate that the combination of innovative technology and strong institutional quality has a positive effect on the development of financial markets. In conclusion, this study recommends policy modifications to enhance competitiveness and ensure long-term financial growth by promoting institutional quality, technological innovation, and the widespread adoption of technology. These results are robust across alternative specifications that account for standard error clustering.

Date: 2025
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DOI: 10.1080/13504851.2023.2288033

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