Financial development and innovation: Do institutions and human capital matter?
Francis Atsu, Samuel Olorunfemi Adams
Abstract
This paper explores the dynamic link between financial development and innovation, while accounting for human capital and institutional quality for 29 OECD countries spanning 40 years (1980-2019). The findings based on Generalized Method of Moments (GMM) and the Fully Modified Ordinary Least Squares (FMOLS) estimators show that trade, institutional quality, human capital and financial development promote innovation activities, while foreign direct investment has the opposite effect. Further, the findings show a non-linear relationship between finance and innovation.
Topics & Concepts
Human capitalBusinessFinanceFinancial innovationFinancial systemEconomicsEconomic growthEconomic Growth and DevelopmentEconomic Growth and ProductivityFiscal Policy and Economic Growth