The link between financial development and knowledge-based economy - Evidence from emerging markets

This paper examines the role of financial development in shaping knowledge-based economy in emerging countries using panel data approach from 1995 to 2011. on overall financial development,we find that larger financial sector and financial system that is more bank-based are associated with higher knowledge economy status. on banking development,our results show that a well-developed banking sector contributes positively to a country’s standing in the knowledge economy index. interestingly,we find no evidence that stock market influences the state of knowledge economy. the findings suggest that bank-based financial system is the key financial structure that best supports knowledge-based development in emerging countries. © 2015 statistical economic and social research and. all rights reserved.