Information and Communications Technology (ICT) Diffusion and Financial Development Nexus in African Countries

This study empirically explores the ICT diffusion-financial development nexus for 45 African countries over the period 2000-2018. For the investigation of the nexus, the recently developed panel VAR in generalized method of moments (GMM) estimation technique was applied. The findings provide evidence of bidirectional causality between ICT diffusion and the complex multidimensional nature of financial development (except for financial institution development and financial institutions access). The panel VAR in GMM reveals that (i) ICT diffusion is significant and positive to almost all the complex multidimensional nature of the financial development (except financial development index and financial markets depth), while (ii) the complex multidimensional nature of the financial development measures played both significant positive and negative roles in ICT diffusion. An important policy implication for sustainable financial development through the improvement and efficient use and affordability of ICT infrastructures/services is recommended.