This paper examines the impact of financial market development on technological innovation across 32 developed and emerging countries. Using a fixed effects identification strategy, the authors explore two economic mechanisms: the reduction of financing costs and the evaluation of long-term, risky projects. They find that industries more dependent on external finance and those with higher tech intensity exhibit higher innovation levels in countries with better-developed equity markets. However, credit market development discourages innovation in these industries. The study contributes to the literature on finance and growth, as well as the relationship between finance and innovation, by providing cross-country evidence on the real effects of financial development on the economy.This paper examines the impact of financial market development on technological innovation across 32 developed and emerging countries. Using a fixed effects identification strategy, the authors explore two economic mechanisms: the reduction of financing costs and the evaluation of long-term, risky projects. They find that industries more dependent on external finance and those with higher tech intensity exhibit higher innovation levels in countries with better-developed equity markets. However, credit market development discourages innovation in these industries. The study contributes to the literature on finance and growth, as well as the relationship between finance and innovation, by providing cross-country evidence on the real effects of financial development on the economy.