A Research About The Interactive Mechanism Between Financial Development And Technological Innovations

With economic development and social changes, science and technology as the primaryproductive force has become a decisive factor in modern economic development. Scientificand technological innovation as a part of measuring national comprehensive, whose abilityand level determine the extent of economic strength and the level of financial developmentdirectly. To promote economic development, scientific and technological innovation hasmentioned on agenda. The strategic objectives of scientific and technological innovationpromoting economic development have all presented in the17th and18th CPC NationalCongress, the Twelfth Five-Year Plan and the Central Economic Working Conference in2014.Therefore, the study in this article from the perspective of the interactive mechanism betweenfinancial development and technological innovation has some practical significance.The subject studies the interactive mechanism between financial development andtechnological innovation by combining with theoretical analysis, present analysis andempirical analysis. First of all, analyze the interactive mechanism of financial developmentand technological innovation by theoretical analysis. Financial development can promotescientific and technological innovation through risk management, transforming fruits ofscientific and technological innovations, project evaluation and credit support and other ways.Scientific and technological innovation also can promote financial development by expandingdemand for financial products, optimizing the financial external environment, broadening thepublicity channels of financial information, improving the efficiency of the financial sectorand other ways.It shows a better interaction between technological innovation and financialdevelopment. Secondly, it elaborates the achievement and lack of the interaction betweenfinancial development and technological innovation currently combining with large amountsof data, provincial policy, and individual examples. The main performances are: China’s R&Dinvestment is relatively smaller, but R&D internal expenditure in the mass is upward trend;the emergence of the gem provides better financing platform for science and technologyenterprises; the main parties respond positively to the national policy to promote scientific and technological innovation, etc. Then, build PVAR model by the data from31provincesand annual data between2000and2012. Impulse response function analysis and variancedecomposition show that the interaction between financial development and technologicalinnovation does exist, but that the relationship has a certain lag and no significant. Last, theconclusion contains the following sections: there are many problems on endogenousmechanisms of technological innovation promoting financial development. Technologicalinnovation is financial development’s endogenous and exogenous variables. The interactionbetween financial development and technological innovation has mutual advantage andhysteresis. Financial investment is less in the technology industry. Systems and standardsrelated to benign interaction between financial development and technological innovation isstill not perfect. Accordingly, the following recommendation corresponding is proposed.Control strictly the process of research and investment on the products of technologicalinnovation. It is necessary to promote scientific and technological innovation into the core offinancial development. Continue to promote the benign interaction between financialdevelopment and technological innovation. Increase investment in technology industry andimprove the financial development and technological innovation related systems andstandards.