Research Article
The Relationship between Financial Development and Innovation: An Empirical Study on Developing and Developed Countries
Abstract
Innovation has emerged as one of the key factors providing a competitive advantage for countries and firms in today's global environment. In this context, identifying the factors that influence innovation is of great importance. Although creative ideas and inventions play a critical role in the innovation process, financial resources are required to commercialize these ideas and bring them to market. However, a review of the literature reveals that the relationship between innovation and financial development has been largely overlooked in many empirical studies. In this study, this relationship was examined within a theoretical and empirical framework. In the research using panel data analysis processes, data from 14 developing and 17 developed countries for the period 1980-2019 were used. Alternative and more robust estimators such as Beck-Kats, Parks-Kmenta and Driscoll-Kraay were used in estimating the models. As a result of the analysis, it was concluded that financial development has a generally significant but negative effect on innovations. These results provide important clues for the business world and policy makers in both developed and developing countries. Evaluations and recommendations are included in the conclusion section.
References
- Aristizabal‐Ramirez, M., Botero‐Franco, M. C. & Canavire‐Bacarreza, G. (2017). Does financial development promote innovation in developing economies? An empirical analysis. Review of Development Economics, 21(3), 475-496. https://doi.org/10.1111/rode.12314
- Asimakopoulos, S., Kim, J., & Zhu, X. (2019). Financial development and innovation-led growth: Is too much finance better?. SSRN Working Paper. https://doi.org/10.2139/ssrn.3289127
- Asmar, A. (2021). The Impact of Financial Development on Innovation [Yüksek Lisans Tezi, Eastern Mediterranean University (EMU)].
- Atsu, F., & Adams, S. (2023). Financial development and innovation: Do institutions and human capital matter? Heliyon. 9(8).
- Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3), 634-647.
- Benfratello, L., Schiantarelli, F., & Sembenelli, A. (2008). Banks and innovation: Microeconometric evidence on Italian firms. Journal of Financial Economics, 90(2), 197-217. https://doi.org/10.1016/j.jfineco.2008.01.001
- Demirci, N. S. (2017). Finansal gelişmişliğin özel sektör Ar-Ge harcamalarına etkisi: Türkiye için eşbütünleşme, nedensellik, etki-tepki analizleri ve varyans ayrıştırması (1990-2014). Journal of Accounting & Finance, (74), 157-182. https://doi.org/10.25095/mufad.396864
- Hall, B. H. (2002) The financing of research and development. Oxford Review of Economic Policy, 18, 35-51. https://doi.org/10.1093/oxrep/18.1.35
- Hanley, A., Liu, W., & Vaona, A. (2011). Financial development and innovation in China: Evidence from the provincial data. Kiel Institute for the World Economy.
- Hatemi-j, A. (2008). Tests for cointegration with two unknown regime shifts with an application to financial market ıntegration. Empirical Economics, 35(3), 497-505.
- Hausman, J. A. (1978), Specification tests in econometrics, Econometrica, 46(6), 1251-1271.
- Hsu, P., Tian, X. V., & Xu, Y. (2014). Financial development and innovation: Cross-country evidence. Journal of Financial Economics, 112 (1), 116-135. https://doi.org/10.1016/j.jfineco.2013.12.002
- Hsu, P., Tian, X., & Xu, Y. (2010). Financial development and innovation: Cross country evidence. Journal of Financial Economics, 112(1), 1-35. https://doi.org/10.1016/j.jfineco.2013.12.002
- IMF, (2021). International monetary fund, https://data.imf.org/?sk=f8032e80-b36c-43b1-ac26-493c5b1cd33b
- IMF, (2023). International monetary fund. https://data.imf.org/?sk=f8032e80-b36c43b1-ac26-493c5b1cd33b Kapidani, M., & Luci, E. (2019). The effects on innovation from financial sector development: Evidence from developing countries. Journal of Competitiveness, 11(2), 84. https://doi.org/10.7441/ joc.2019.02.06
- King, R. G., & Levine, R. (1993). Finance and growth: Schumpeter might be right. The Quarterly Journal of Economics, 108(3), 717-737. https://doi.org/10.2307/2118406
- Koçak, E. (2018). Finansal gelişme ve yenilik (inovasyon): Türkiye üzerine ampirik bir araştırma. Kapadokya Akademik Bakış, 2 (1), 12-28.
- Law, S. H., Lee, W. C., & Singh, N. (2018). Revisiting the finance-innovation nexus: evidence from a non-linear approach. Journal of Innovation and Knowledge, 3, 143-153. https://doi.org/10.1016/j.jik.2017.02.001
- Levine, R. (1997). Financial development and economic growth: views and agenda. Journal of Economic Literature, 35 (2), 688-726.
- Meierrieks, D. (2014). Financial development and innovation: is there evidence of a Schumpeterian finance-innovation nexus? Annals of Economics and Finance, 15(2), 61-81.
- Porter, M. E. (1992). Capital choices: Changing the way America invests in industry. Journal of Applied Corporate Finance, 5(2), 4-16. https://doi.org/10.1111/j.1745-6622.1992.tb00485.x
- Schumpeter, J.A. (1911) The theory of economic development. Harvard University Press, Cambridge.
- Sharma, S. (2007). Financial development and innovation in small firms. World Bank Policy Research Working Paper. (4350).
- Stock, J. H., & Watson, M. W. (1993). A simple estimator of cointegrating vectors in higher order ıntegrated systems. Econometrica: Journal of the Econometric Society, 783-820.
- Tadesse, S. (2005). Financial development and technology. The William Davidson Institute at the University of Michigan Business School. http://dx.doi.org/10.2139/ssrn.681562
- Tee, L. T., Low, S. W., Kew, S. R., & Ghazali N. A. (2014). Financial development and innovation activity: Evidence from selected east Asian countries. Prague Economic Papers, (2), 162-180. doi: 10.18267/j.pep.478
- WDI. (2023). World Development Indicators. https://databank.worldbank.org/source/world-development-indicators
- Wooldridge, J. M. (2003). Cluster-sample methods in applied econometrics. American Economic Review, 93(2), 133-138.
- Xiao, S., & Zhao, S. (2012). Financial development, government ownership of banks and firm innovation. Journal of International Money and Finance 31(4), 880-906. https://doi.org/10.1016/j.jimonfin.2012.01.006
- Yerdelen Tatoğlu, F. (2012). Panel veri ekonometrisi, stata uygulamaları. Beta Yayınevi.
- Yerdelen Tatoğlu, F. (2013). İleri panel veri analizi (2. Baskı). Beta Yayınevi.
- Yüksel Çakırca, Ş. (2022). Yenilik üzerine üç makale [Doktora Tezi, Afyon Kocatepe Üniversitesi].
- Zhu, X., Asimakopoulos S., & Kim. J. (2020). Financial development and innovation-led growth: is too much finance better?. Journal of International Money and Finance, 100, 102083.
Finansal Gelişme ve Teknolojik Yenilik İlişkisi: Gelişmekte Olan ve Gelişmiş Ülkeler Üzerine Ampirik Bir İnceleme
Abstract
Yenilik, günümüzde ülkeler ve firmalar açısından rekabet avantajı sağlayan temel unsurlardan biri olarak öne çıkmaktadır. Bu bağlamda, yenilikleri etkileyen faktörlerin belirlenmesi büyük önem taşımaktadır. Her ne kadar yaratıcı fikirler ve icatlar yenilik sürecinde kritik rol oynasa da bu fikirlerin ticarileştirilmesi ve pazara sunulması için finansmana ihtiyaç duyulmaktadır. Ancak literatür incelendiğinde, yenilik ile finansal gelişme arasındaki ilişkinin çoğu ampirik çalışmada yeterince ele alınmadığı görülmektedir. Bu çalışmada, söz konusu ilişki teorik ve ampirik çerçevede incelenmiştir. Panel veri analiz süreçlerinin kullanıldığı araştırmada, 14 gelişmekte olan ve 17 gelişmiş ülkenin 1980-2019 dönemine ait verileri kullanılmıştır. Modellerin tahmininde Beck-Kats, Parks-Kmenta ve Driscoll-Kraay gibi alternatif ve daha dirençli tahminciler kullanılmıştır. Yapılan analizler sonucunda, finansal gelişmenin yenilikler üzerinde genel olarak anlamlı, ancak negatif yönlü etkisi olduğu sonucuna ulaşılmıştır. Bu sonuçlar, gerek gelişmiş gerekse gelişmekte olan ülkelerin iş dünyası ve politika yapıcıları için önemli ipuçları sunmaktadır. Değerlendirme ve önerilere sonuç kısmında yer verilmiştir.
References
- Aristizabal‐Ramirez, M., Botero‐Franco, M. C. & Canavire‐Bacarreza, G. (2017). Does financial development promote innovation in developing economies? An empirical analysis. Review of Development Economics, 21(3), 475-496. https://doi.org/10.1111/rode.12314
- Asimakopoulos, S., Kim, J., & Zhu, X. (2019). Financial development and innovation-led growth: Is too much finance better?. SSRN Working Paper. https://doi.org/10.2139/ssrn.3289127
- Asmar, A. (2021). The Impact of Financial Development on Innovation [Yüksek Lisans Tezi, Eastern Mediterranean University (EMU)].
- Atsu, F., & Adams, S. (2023). Financial development and innovation: Do institutions and human capital matter? Heliyon. 9(8).
- Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3), 634-647.
- Benfratello, L., Schiantarelli, F., & Sembenelli, A. (2008). Banks and innovation: Microeconometric evidence on Italian firms. Journal of Financial Economics, 90(2), 197-217. https://doi.org/10.1016/j.jfineco.2008.01.001
- Demirci, N. S. (2017). Finansal gelişmişliğin özel sektör Ar-Ge harcamalarına etkisi: Türkiye için eşbütünleşme, nedensellik, etki-tepki analizleri ve varyans ayrıştırması (1990-2014). Journal of Accounting & Finance, (74), 157-182. https://doi.org/10.25095/mufad.396864
- Hall, B. H. (2002) The financing of research and development. Oxford Review of Economic Policy, 18, 35-51. https://doi.org/10.1093/oxrep/18.1.35
- Hanley, A., Liu, W., & Vaona, A. (2011). Financial development and innovation in China: Evidence from the provincial data. Kiel Institute for the World Economy.
- Hatemi-j, A. (2008). Tests for cointegration with two unknown regime shifts with an application to financial market ıntegration. Empirical Economics, 35(3), 497-505.
- Hausman, J. A. (1978), Specification tests in econometrics, Econometrica, 46(6), 1251-1271.
- Hsu, P., Tian, X. V., & Xu, Y. (2014). Financial development and innovation: Cross-country evidence. Journal of Financial Economics, 112 (1), 116-135. https://doi.org/10.1016/j.jfineco.2013.12.002
- Hsu, P., Tian, X., & Xu, Y. (2010). Financial development and innovation: Cross country evidence. Journal of Financial Economics, 112(1), 1-35. https://doi.org/10.1016/j.jfineco.2013.12.002
- IMF, (2021). International monetary fund, https://data.imf.org/?sk=f8032e80-b36c-43b1-ac26-493c5b1cd33b
- IMF, (2023). International monetary fund. https://data.imf.org/?sk=f8032e80-b36c43b1-ac26-493c5b1cd33b Kapidani, M., & Luci, E. (2019). The effects on innovation from financial sector development: Evidence from developing countries. Journal of Competitiveness, 11(2), 84. https://doi.org/10.7441/ joc.2019.02.06
- King, R. G., & Levine, R. (1993). Finance and growth: Schumpeter might be right. The Quarterly Journal of Economics, 108(3), 717-737. https://doi.org/10.2307/2118406
- Koçak, E. (2018). Finansal gelişme ve yenilik (inovasyon): Türkiye üzerine ampirik bir araştırma. Kapadokya Akademik Bakış, 2 (1), 12-28.
- Law, S. H., Lee, W. C., & Singh, N. (2018). Revisiting the finance-innovation nexus: evidence from a non-linear approach. Journal of Innovation and Knowledge, 3, 143-153. https://doi.org/10.1016/j.jik.2017.02.001
- Levine, R. (1997). Financial development and economic growth: views and agenda. Journal of Economic Literature, 35 (2), 688-726.
- Meierrieks, D. (2014). Financial development and innovation: is there evidence of a Schumpeterian finance-innovation nexus? Annals of Economics and Finance, 15(2), 61-81.
- Porter, M. E. (1992). Capital choices: Changing the way America invests in industry. Journal of Applied Corporate Finance, 5(2), 4-16. https://doi.org/10.1111/j.1745-6622.1992.tb00485.x
- Schumpeter, J.A. (1911) The theory of economic development. Harvard University Press, Cambridge.
- Sharma, S. (2007). Financial development and innovation in small firms. World Bank Policy Research Working Paper. (4350).
- Stock, J. H., & Watson, M. W. (1993). A simple estimator of cointegrating vectors in higher order ıntegrated systems. Econometrica: Journal of the Econometric Society, 783-820.
- Tadesse, S. (2005). Financial development and technology. The William Davidson Institute at the University of Michigan Business School. http://dx.doi.org/10.2139/ssrn.681562
- Tee, L. T., Low, S. W., Kew, S. R., & Ghazali N. A. (2014). Financial development and innovation activity: Evidence from selected east Asian countries. Prague Economic Papers, (2), 162-180. doi: 10.18267/j.pep.478
- WDI. (2023). World Development Indicators. https://databank.worldbank.org/source/world-development-indicators
- Wooldridge, J. M. (2003). Cluster-sample methods in applied econometrics. American Economic Review, 93(2), 133-138.
- Xiao, S., & Zhao, S. (2012). Financial development, government ownership of banks and firm innovation. Journal of International Money and Finance 31(4), 880-906. https://doi.org/10.1016/j.jimonfin.2012.01.006
- Yerdelen Tatoğlu, F. (2012). Panel veri ekonometrisi, stata uygulamaları. Beta Yayınevi.
- Yerdelen Tatoğlu, F. (2013). İleri panel veri analizi (2. Baskı). Beta Yayınevi.
- Yüksel Çakırca, Ş. (2022). Yenilik üzerine üç makale [Doktora Tezi, Afyon Kocatepe Üniversitesi].
- Zhu, X., Asimakopoulos S., & Kim. J. (2020). Financial development and innovation-led growth: is too much finance better?. Journal of International Money and Finance, 100, 102083.
There are 33 citations in total.
Details
| Primary Language | Turkish |
|---|---|
| Subjects | International Economics (Other) |
| Journal Section | Research Article |
| Authors | |
| Submission Date | October 21, 2025 |
| Acceptance Date | December 19, 2025 |
| Publication Date | March 26, 2026 |
| DOI | https://doi.org/10.52791/aksarayiibd.1807455 |
| IZ | https://izlik.org/JA97SH57AH |
| Published in Issue | Year 2026 Volume: 18 Issue: 1 |