Analysis Of Correlation Between Financial Development And Technology Innovation In China

Innovation is the source of social development and economic growth is thedriving force of social development. People never stop researching innovation anddevelopment. Since the endogenous economic growth theory was proposed, peoplefound technological innovation is the important link between financial developmentand economic growth. Therefore how to highly efficient and stable financialdevelopment to improve the technological innovation and economic growth becamethe focus in academia of various countries. This paper was written based on thetheory researched before and we find that financial development has an impact onthe technological innovation in some ways, for example intermediation ofcapital, optimal allocation, risk diversification, reveal information, monitoring,incentives and facilitate transactions and so on. At the same time, technologicalinnovation promotes financial development by enlarging space and reducing cost.The influence between them promotes the social economic growth. In the21century,we should find new growth momentum rather than invest more capital to improveeconomic growth. So how to build an efficient, stable, and the hugepotential financial development system to promote technological innovation andsustainable economic growth is our countries’ emerging research direction.This article is divided into six chapters. The first chapter presented thebackground and significance of this study, the methods and content of the study. Thesecond chapter is based on the theoretical results existed, overview the financialdevelopment and technological innovation as well as the correlation between them.The third chapter analyzes the theoretical relationship between financialdevelopment and technological innovation in-depth. The fourth chapter mainlychooses the right empirical analysis to confirm the mechanism of action raised bychapter3and introduces the principle of the methods and tools. The fifth chapteruses the data of1997to2008to confirm if there is granger causality betweenfinancial development and technological innovation. Chapter VI put forwardrelevant policy recommenda-tions for China’s economic growth based on the conclusions according to the fifth chapter. At last put forward the lack of the articleand the outlook of future research.The innovation point of the article is in-depth analysis of the relationshipbetween financial development and technological innovation and use the method toconfirm the conclusions. This article uses catastrophe progression method toevaluate the financial development and technological innovation and Granger test toprove the relationship between them. Using the data1997-2008as the sample of themodel makes the conclusions more convincing and closer to the reality, to make sureof the policy recommendations more constructive.