The impact of ICT on financial development: Empirical evidence from the Gulf Cooperation Council countries

Abstract

The globalization revolution has led to many countries considering advancing technology, which has led to electronic finance becoming an important aspect in all economic and financial sectors. This study aims to investigate the impact of information and communication technology (ICT) on the financial development index of six Gulf Cooperation Council (GCC) countries from the period 2000 to 2016. The results are reported in terms of two main ICT variables: fixed broadband and Internet users as a proxy of ICT and domestic credit to private sector as a percentage of gross domestic product (GDP) and broad money supply/GDP as two proxies of the financial development index. This methodology used fixed effects (FEs) estimations, and the results show that an increase in fixed broadband has a statistically significant and positive effect on both proxies of financial development. In terms of domestic credit as a percentage of the GDP proxy, the positive effects of ICT (broadband) are greater than the one from Internet users. A 1% increase in fixed broadband leads to approximately 2% increase in financial development, but the Internet user variable resulted in about a 0.09% increase. The other money supply proxy increased by 0.40% when ICT increased by 1%. Additionally, money supply increased by 0.11% when the Internet user ratio increased by 1% .To control for the endogeneity problem, the study used a generalized method of moments estimator, and the results confirm the previous results of the FE. Moreover, the negative impact of economic growth and natural resources was found to be valid and significant, while urbanization and trade openness were found to significantly and positively affect both financial development proxies. The main conclusion of the study is that GCC countries should take action in building an effective joint information system to help construct efficient economic sectors.

Access to Electricity, Information and Communications Technology (Ict), and Financial Development: Evidence From West Africa

“…This is more so as sub-Saharan Africa countries while having made significant progress in mobile phone development according to World Bank (2019a) score low on other measures of ICT as internet usage and fixed telephones. Alshubiri et al (2019) find financial development as measured by Domestic Credit to private sector as a percentage of Gross Domestic Product (GDP) and Broad Money Supply as a percentage of Gross Domestic Product to be positively and significantly influenced by fixed broadband and internet use. In addition examining Nigeria and Kenya, Edo et al (2019) find internet adoption positive and significant for financial development.…”

“…Various studies have examined the impact of ICT measures on economic and financial variables (Adeleye and Eboagu, 2019;Alshubiri et al, 2019;Ejemeyovwi and Osabohien 2018;Ejemeyovwi et al, 2018a;Andrianaivo and Kpodar, 2012). However there is a dearth of such studies in regards to West Africa as regards financial development in particular.…”

Impact of Mobile Phones and Internet Use on Financial Inclusion: Empirical Evidence From the Eu Post-Communist Countries

“…Internet and mobile phones have become useful tools for promoting financial inclusion but also for the development of the financial sector by reducing the costs of financial services, raising the efficiency and working flexibility of the financial institutions (Alshubiri et al, 2019;Asongu & Nwachukwu, 2019;Edo et al, 2019), providing access to formal financial services (Asongu, 2015), reducing the information asymmetry through information sharing (Aminuzzaman et al, 2003;Asongu & Moulin, 2016;Asongu & Nwachukwu, 2019) reducing income inequalities (Asongu & Odhiambo, 2017;Asongu et al, 2018). Andrianaivo and Kpodar (2012) conducted a study in African countries and found a positive and significant correlation between financial inclusion and mobile phone penetration rates.…”

“…ICT diffusion influences economic and financial development (Farhadi et al, 2012;Toader et al, 2018;Alshubiri et al, 2019) and will continue to shape the future of our society by changing the ways how people are connected and communicate one to each other, by eliminated geographical borders between nations and bringing societies close to each other (Naikoo et al, 2018), by reducing cultural differences (Kulesz, 2016).…”

Information and Communication Technology and Organizational Performance During Covid-19 Pandemic: The Role of Organizational Commitment, Growth Mindset, and Entrepreneurial Orientation

“…Such disagreements suggest the importance of understanding “how” and “if” ICTs impact organizational performance. In examining how ICT works in organization, Alshubiri et al (2019) propose to analyze not only the financial return that ICT brings to the company. This view is supported by Lochovsky et al (1996) who argue that the use of financial measures, in and of itself, does not fully reflect the benefits that ICT brings to the organization.…”