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Do Technological Developments and Financial Development Promote Economic Growth: Fresh Evidence from Romania

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  • Ur Rehman, Ijaz
  • Shahbaz, Muhammad
  • Kyophilavong, Phouphet

Abstract

We study the relationship between financial development, technological development and economic growth in Romania. We construct aggregate indices of financial development and technological development using principal component analysis. The ARDL bounds testing approach shows the presence of cointegration between financial development, technological development and economic growth. Financial development and technological development contribute to economic growth. Moreover, financial development leads technological development which Granger causes economic growth. Our empirical evidence suggest that economic growth is driven by financial development via technological development and that, in Romania,a stable financial system and capital market can facilitate technological innovations.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 51813.

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Date of creation: 21 Nov 2013
Date of revision: 29 Nov 2013
Handle: RePEc:pra:mprapa:51813

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Keywords: Financial development; technological development; economic growth; Romania;

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