Abstract
This study empirically analyzed the effected determinants of global innovation, economic freedom, and GDP on financial development. An analysis was conducted by the OLS error correction model using panel data(N=224) from 2011 to 2019 of 28 countries. The results showed that economic freedom was the most influential factor in global financial development, and that global innovation and GDP also had a positive impact. Among components of economic freedom, property rights, money soundness, and market openness were found to have a positive impact on financial development, while regulations and government size were found to have a negative impact on financial development. And among components of global innovation, market sophistication, human capital research, infrastructure, knowledge and technology outputs, and business sophistication had an impact on financial development, but institutions and creative outputs did not appear to have an effect. This results has an academic importance of showing that economic freedom and innovation is more important factors than GDP for global financial development. Thus it is assumed that an advanced free-market economy system with a fair legal framework and a constant innovation is important for financial development in global environment where neo-protectionism is spreading.
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