Financial market development and the effectiveness of R&D investment: Evidence from developed and emerging countries |
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Authors: | Reza H. Chowdhury Min Maung |
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Affiliation: | a University of Dubai, College of Business Administration, Department of Finance and Banking, PO Box 14143, Dubai, United Arab Emirates b University of Saskatchewan, Edwards School of Business, Department of Finance and Management Science, Saskatoon, SK S7N 5A7, Canada |
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Abstract: | 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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Keywords: | Financial market development R& D investment |
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