Munich Personal RePEc Archive

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

Ur Rehman, Ijaz and Shahbaz, Muhammad and Kyophilavong, Phouphet (2013): Do Technological Developments and Financial Development Promote Economic Growth: Fresh Evidence from Romania.

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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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