The link between technological innovation and financial development: Evidence from selected OECD countries

Financial development is a main goal for developing and developed countries. Therefore, this study aims to investigate the impact of technological innovation on financial development over the period 1990-2018 for 21 OECD countries. The study integrates economic growth, natural resources and financial globalisation into the financial development equation as other explanatory variables. To estimate the long-run coefficients, the Driscoll-Kraay standard errors, panel corrected standard errors and feasible generalised least squares estimators are applied. The Dumitrescu-Hurlin bootstrap causality test is used to examine the causal linkages among the variables. It is found that there exists cointegration between the variables. It is also found that technological innovation, economic growth and financial globalisation positively affect financial development while natural resources decrease it in the long run. The findings reveal that technological innovation and financial development cause each other. The study will present some policy recommendations to accelerate financial sector development in OECD countries.