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Financial market development and the effectiveness of R&D investment: Evidence from developed and emerging countries

  • Chowdhury, Reza H.
  • Maung, Min
Registered author(s):

    Does financial market development enhance the effectiveness of R&D investment in an economy? To address this question, we apply three distinct approaches including (i) ordinary least square method, (ii) cross-country instrumental variable regression approach, and (iii) panel regression method. By using a dataset of both developed and emerging countries, we find that financial market development significantly contributes to the effectiveness of total R&D investment. This finding remains robust across different model specifications and individual estimation methods. Our finding provides an important guidance to policy makers in implementing a sound financial environment that can facilitate the total contribution of R&D investment.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0275531911000602
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    Article provided by Elsevier in its journal Research in International Business and Finance.

    Volume (Year): 26 (2012)
    Issue (Month): 2 ()
    Pages: 258-272

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    Handle: RePEc:eee:riibaf:v:26:y:2012:i:2:p:258-272
    Contact details of provider: Web page: http://www.elsevier.com/locate/ribaf

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