Open AccessThe Impact of Financial Development on Innovation Activities in Emerging and Developing Countries
Author(s) -
kamiliaKamilia loukilLoukil
Publication year - 2019
Publication title -
business and economic research
Language(s) - English
Resource type - Journals
ISSN - 2162-4860
DOI - 10.5296/ber.v10i1.11235
Subject(s) - sample (material) , developing country , business , estimation , financial innovation , finance , panel data , value (mathematics) , quality (philosophy) , financial services , economics , financial system , economic growth , econometrics , philosophy , chemistry , management , chromatography , epistemology , machine learning , computer science
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.