The coevolution of financial and technological innovations
Lin William Cong, Po-Hsuan Hsu, John P. Walsh
Research Policy · 2026 · Volume 55 · Issue 7
DOI: 10.1016/j.respol.2026.105495
Abstract
Financial and technological innovations are central drivers of economic growth, yet they are typically studied in isolation. This article develops an integrated perspective on financial and technological innovation coevolution, emphasizing the bidirectional feedback between financial systems and technological progress. Drawing on historical evidence and modern developments, we show how technological advances reshape financial intermediation, while financial innovations—through capital allocation, risk sharing, and market design—actively influence the direction and pace of technological changes. We take a broad historical perspective and highlight recurring mechanisms linking innovations in finance and technology, including complementarities in information processing, institutional dynamics, and feedback loops driven by data, platforms, and market structure. A key insight is that, in the current era, finance is no longer merely an enabler of technology but increasingly a driver of technological innovations itself. Moreover, we provide an overview of recent studies included in the special issue on “The Coevolution of Financial and Technological Innovations.” Finally, we discuss the challenges, opportunities, and policy implications for future research, as illustrated by these papers and for this interdisciplinary field in general.
Keywords
Coevolution, Financial innovation, History, Technological development, Technological innovation
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