Technology and Economic Growth: Role of Financial Development in South Asian Countries

Abstract

Financial development plays an instrumental role in the process of economic growth and development through mobilization of savings and creating investment opportunities. Financial development also leads to enhance the level of technology by providing finance to entrepreneurs for technological innovations which leads to economic growth. This study examines the impact of financial development and technology on economic growth of selected South Asian countries over the time span 1984-2017. Due to endogeneity problem, the empirical model used in the study is estimated by System Generalized Method of Moment (System GMM). Empirical results indicated that financial development, technology and human capital have positive and significant impact on economic growth in developing South Asian countries. To attain a sustainable economic growth, South Asian countries should put their efforts to develop their financial market that stimulates economic growth by providing finance to entrepreneurs for innovations.