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Is the fourth industrial revolution transforming the relationship between financial development and its determinants in emerging economies?

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  • Gu, Jianqiang
  • Gouliamos, Kostas
  • Lobonţ, Oana-Ramona
  • Nicoleta-Claudia, Moldovan

Abstract

The fourth industrial revolution has been significantly affected by different economic sectors, including the financial sector. The financial sector has dramatically changed the way it works and hence, providing new opportunities to investors. The advancement of new technologies in information and communication has a strong association with financial sector performance, profitability, and development. This study examines the impact of technological innovation and natural resources on financial development across seven emerging economies (such as China, India, Brazil, Mexico, Russia, Indonesia, and Turkey) from 1990 to 2017. The results of the cointegration test indicate that there is a long-run relationship between financial development and its determinants in all three models. The results further show that natural resources, technological innovation, income, human capital, and research and development (R&D) expenditures are important variables affecting financial development in the long run. We found that human capital strengthens the technological innovation led financial development nexus in E7 countries. In terms of implication, human capital, technological innovation, and continuous investment in R&D can shift the curse into a blessing by transferring natural resources into other productive sectors of the economy.

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  • Gu, Jianqiang & Gouliamos, Kostas & Lobonţ, Oana-Ramona & Nicoleta-Claudia, Moldovan, 2021. "Is the fourth industrial revolution transforming the relationship between financial development and its determinants in emerging economies?," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:tefoso:v:165:y:2021:i:c:s0040162520313895
    DOI: 10.1016/j.techfore.2020.120563
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    3. Cannavacciuolo, Lorella & Ferraro, Giovanna & Ponsiglione, Cristina & Primario, Simonetta & Quinto, Ivana, 2023. "Technological innovation-enabling industry 4.0 paradigm: A systematic literature review," Technovation, Elsevier, vol. 124(C).
    4. Yao, Xilong & Wang, Hualing & Shao, Shuai & Li, Xiaoyu & Guo, Zhi, 2022. "“Booster” or “obstacle”: Can coal capacity cut policies moderate the resource curse effect? Evidence from Shanxi (China)," Resources Policy, Elsevier, vol. 75(C).
    5. Çetin, Murat & Sarıgül, Sevgi Sümerli & Işık, Cem & Avcı, Pınar & Ahmad, Munir & Alvarado, Rafael, 2023. "The impact of natural resources, economic growth, savings, and current account balance on financial sector development: Theory and empirical evidence," Resources Policy, Elsevier, vol. 81(C).
    6. Bhatt, Priyanka C. & Lai, Kuei-Kuei & Drave, Vinayak A. & Lu, Tzu-Chuen & Kumar, Vimal, 2023. "Patent analysis based technology innovation assessment with the lens of disruptive innovation theory: A case of blockchain technological trajectories," Technological Forecasting and Social Change, Elsevier, vol. 196(C).

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    More about this item

    Keywords

    Fourth industrial revolution; Financial development; Natural resources; Technological innovation; E7 economies;
    All these keywords.

    JEL classification:

    • E7 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics

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