Econometric Analysis of the Impact of Financial Structure on Innovation Based on the Fixed Effects Panel Model

• Published in: Mathematical problems in engineering Vol. 2021; pp. 1 - 19
• Main Authors: Wang, Cheng-Ben, Huang, Zhigang
• Format: Journal Article
• Language: English
• Published: New York Hindawi 18.11.2021; Hindawi Limited
• Subjects: Banking industry; Banks; Capital markets; Cost control; Decision theory; Econometrics; Economic analysis; Economic development; Economic growth; Economics; Empirical analysis; Engineering; Evolution; Financial institutions; Financial services; Growth rate; Impact analysis; Industrialized nations; Innovations; Investments; Liberalization; Moral hazard; Per capita; Reforms; Securities markets; Stock exchanges; Subsidies; Sustainable development; Beijing China; United Kingdom > UK; United States > US; China; Japan; Germany
• ISSN: 1024-123X; 1563-5147
• DOI: 10.1155/2021/3022421

This study addresses the impact of financial structure on innovation. The mechanism of the impact of financial structure on innovation at different levels of economic development is elucidated from the perspective of optimal financial structure decision theory and development economics, and empirical evidence is provided using manufacturing data from 59 countries or regions for the period 1996–2015. The study finds that financial structure has no significant effect on innovation at lower levels of economic development, but at higher levels of economic development, market-based financial structure significantly promotes innovation in the industry. The role of financial structure in innovation shifts in the interval where per capita income is greater than 9747 International dollar (hereinafter called I$9747) and less than I$17070. This paper verifies that the innovation approach of technological imitation requires the support of a bank-based financial structure, while the innovation approach of independent innovation requires the support of a market-based financial structure. The differences in innovation approaches at different stages of economic development lead to the evolution of the inherent demand for financial structures in the economy. Promoting the evolution of financial structures according to the stage of economic development is of great significance in building an innovative country and leading the sustainable and healthy development of the economy.