Financial Development and Innovation-Led Growth: Is Too Much Finance Better?

Asimakopoulos, Stylianos; Zhu, Xiaoyang

doi:10.2139/ssrn.3289127

SSRN Journal

2018

DOI: 10.2139/ssrn.3289127

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Financial Development and Innovation-Led Growth: Is Too Much Finance Better?

Stylianos Asimakopoulos

Xiaoyang Zhu

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2021

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Relationship between financial innovation, financial depth, and economic growth

Shapoval

2021

Investment Management and Financial Innovations

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The intrinsic property of modern economic development is financial deepening in the light of incremental spearheading financial innovation opportunities. The paper deals with the relationship between financial depth, financial innovation, and economic growth among 22 OECD economies over 2007–2018 by applying pooled OLS and fixed effect panel data regression analysis. The purpose of the paper is to empirically test whether the economic growth depends on financial depth, financial innovation, and institutional environment (Worldwide Governance Indicators). The findings shed light on the recent discussion on the pros and cons of financial innovation. The estimation results show that while financial depth is a strong predictor of economic growth across high- and upper-middle-income economies, financial innovation is a slightly weaker predictor. Despite the identified positive impact of financial innovation on economic growth, it is asserted that the negative effect of financial depth may indicate oversaturated financial market in developed countries. Сonsistent with the general notion that the institutional framework promotes the capacity of the ﬁnancial sector for financial innovations implementation, this paper states that financial depth and financial innovations are better prerequisites of economic growth than institutional development. AcknowledgmentThe paper was funded as a part of the “Relationship between financial depth and economic growth in Ukraine” research project (No. 0121U110766), conducted in the State Institution “Institute for Economics and Forecasting of the NAS of Ukraine”.

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Relationship between financial innovation, financial depth, and economic growth

Shapoval

2021

Investment Management and Financial Innovations

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Financial Development and Innovation-Led Growth: Is Too Much Finance Better?

Cited by 1 publication

References 50 publications

Relationship between financial innovation, financial depth, and economic growth

Relationship between financial innovation, financial depth, and economic growth

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