Research On The Effect Of Financial Development Promoting Technology Innovation And Its Output Transformation

With the rapid development of the social economy, technology innovation not only becomes the source of core competitiveness of enterprises but also turns to be the key factor on promoting modern economic growth. Technology innovation is a dynamic and complex process which including the phases of research and development, trial, commercialization and industrialization, and this process demonstrates characteristics of high investment, high risk and high yield. As both the enhancement of technology innovation and technology innovation output transformation need the support of the financial system, a fully functional, efficient and stable financial system will be built as a support in order to safeguard their sound development. Financial development undoubtedly contributed to the technology innovation and its output transformation, but in reality, not all aspects of the financial system play a positive role effectively, there still exists many problems. Therefore, deep analysis and research on the effect of financial development system on promoting technology innovation and its output transformation are both necessary and meaningful. It will be beneficial for improving China’s financial system, enhancing the level of innovation and increasing the capability of independent innovation.According to the theory of financial development, the financial system has basic functions, such as liquidation payment, allocation of resources, risk management, information processing, supervision and encouragement, it also play a significant role in promoting technology innovation and reducing transaction costs. At present, the development of the financial system in China has made great progress. Stocks market, bonds market and insurance markets, risk investment business develop rapidly in the new period and maintain higher growth rate. But at the same time, in view of China is still a developing country, many institutional is not perfect compare to developed countries, for instance the efficiency of financial intermediation is low, financial markets are not sound and financial structure is irrational, so that its effect on promoting technology innovation and its output transformation is suppressed. A lot of practice also shows that there exists a great finance gap between supply of the financial system and the demand of technology innovation. In the process of technology innovation at present in our country, the amount of loans from financial institutions for scientific and technology activities is much less compare to government funds and corporate self-financing funds. In2007, the amount of loans from financial institutions accounted for the total funds of science and teclinology funds is lower than5%, and the ratio is decreasing year by year, it is not beneficial for carrying out R&D activities. As China’s financial system is not perfect, capital markets are underdeveloped, enterprises have difficulties in financing directly, the efficiency of transforming deposits into the loan is relatively low, financial development has failed to promote technology innovation. Therefore, research on the internal driving force of the financial development system promotes technology innovation and its output transform into economic growth is also very necessary. Based on the microscopic mechanism of financial development promotes technology innovation, using the data of31Chinese provinces from1998to2009, constructing the dynamic panel data model of testing the technology innovation and its economic growth transformation, analyzes the effect of financial development system on technology innovation and its way to turn technology innovation into economic growth, designed to more accurately grasp the effect of financial development system on technology innovation and its output transformation, as well as to propose financial development suggestions for the relevant decision-making departments in order to promote technology innovation and its output transformation.The main conclusions are as follows:Firstly, in the long run, there exists a stability of the equilibrium relationship between provincial financial development and technology innovation, financial development is the Granger causality of technology innovation, financial scale, financial development efficiency and financial development structure have positive relationship with technology innovation, But in the short term, the different aspects of the regional financial system impact on innovation is quite different. Secondly, the provincial technology innovation output capacity directly is affected by its current and lags phase factors, in particular is heavily impacted by its first lag phase. Thirdly, Base on dynamic panel data model, financial development scale, financial development efficiency and financial development structure are important factors, positive related to technology innovation, but their direct influence is weak. Last, the promotion effect of technology innovation on economic growth is affected by financial development system, and the promotion effect of technology innovation on economic growth is significant after including financial development system variables and the interaction term with the innovation output. The result shows that the effect of financial development promoting technology output transformation depending on the support of the whole financial development system.Finally, this paper give some suggestions about how to build a stable and effective financial system for promoting technology innovation and its output transformation based on empirical research conclusions. Firstly, the quality of financial services should be improved. The financial services should be enhanced and risks in the process of technology innovation should be decentralized gradually. Secondly, it will continue to deepen the reform of the financial development system, adjust the structure of financial development and enhance the ability of the financial system so as to promote technological innovation. Thirdly, the multi-level capital market should be established and improved. The proportion of direct financing of technology innovation projects should be increased and the financing channels of technology innovation should be broadened. Last, the financial scale, efficiency and structure of the financial development system should be fully considered. The ability of the financial development that promotes technology innovation output turn into economic growth should be enhanced.