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Essays on Financialization, Innovation and Growth

Ali, Muhammad (2021) Essays on Financialization, Innovation and Growth. Doctoral thesis, University of Huddersfield.

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Abstract

The study shows the importance of financial sector and its impact on the economy through detailed empirical analysis along with theoretical developments. The study covers some very importance aspects such as financial development and growth, the relation of financial liberalization & financial crises and financial development impact on innovation. Another important aspect of the study covers the impact of innovation on unemployment.

The methodology adopted included picking up sample of 28 member countries of EU, acquiring data on the related variables and picking proxies where inevitable. Econometric models were developed and applied, and the results were obtained. The study uses panel data for the period between 1995-2019 and Econometric analysis used in the study included tests, Pooled OLS, GMM, DOLS, FMOLS and Granger causality test for empirical analysis.

The results from the empirical analysis showed that financial development showed a strong positive impact on growth in the EU-28 before the financial crises of 2008 but the impact had an inverse impact on the growth. The main cause of the adverse impact was triggered by the sub-prime mortgage crises. Further while analysing the impact of financial liberalization and bank risk absorption ability on banking instability showed a negative relationship for the considered sample. The impact of financial development on innovation showed to have significant positive impact, also R&D has a greater negative influence unemployment compared to innovation.

This paper highlights the fact that the correct allocation of credit will enable the firms to grow, but also the focus should be on innovative and growth-related projects which provides long term benefit to the economy. The leverage of the firms should be monitored at the firm level to use it as an early warning system for default.

This paper suggests both the monetary and financial stability policies should be well-coordinated. As the technology progresses there needs to be integration between the technology policy reforms in product innovation, reforms in process innovation, advancement in ICT sector, fintech and the financial and labour markets.

Item Type: Thesis (Doctoral)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Schools: Huddersfield Business School
Depositing User: Annabel Danson-Darbyshire
Date Deposited: 20 Dec 2021 16:51
Last Modified: 20 Dec 2021 16:51
URI: http://eprints.hud.ac.uk/id/eprint/35638

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