Chinese banking sector: A major stakeholder in bringing fourth industrial revolution in the country.

• Examine the impact of bank finance and financial risk on technological innovation. • We applied advanced time series methods for analysis in the Chinese banking sector. • Bank financing has a positive relationship with technological innovation. • Non-bank financing, R&D, real GDP promote technological innovation. • Financial risk index shows a negative relationship with technological innovation. The industrial revolution 4.0 has caused an abrupt change in society and has changed the way we live. The importance of banking finance in affecting technological innovation is a topic of great interest in recent years. This endeavor empirically examines the impact of bank financing and financial risk on technological innovation in the case of China from 1990 to 2017. We use Maki cointegration and Bayer-Hanck cointegration to serve this purpose and the estimation cointegration regression (FMOLS) method. The results show that bank financing, non-bank financing, real GDP, research and development (R&D), and Financial Risk Index (FRI) are important to explain technological innovation in China. Our results further show that an increase in financial risk alters the relationship between bank financing and technological innovation. High financial risk is a big hurdle in bank financing, leading to technological innovation in China. Moreover, we find an increase in financial risk alters the relationship between non-bank financing and technological innovation. [ABSTRACT FROM AUTHOR]