ICT, Financial Sector Development and Financial Access

Journal of the Knowledge Economy, 10(2), pp. 465–490 (2019)

28 Pages Posted: 15 Mar 2017 Last revised: 8 Aug 2019

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Jacinta Nwachukwu

Coventry University

Date Written: January 1, 2017

Abstract

This study assesses the role of ICT (internet and mobile phone penetration) in complementing financial sector development (financial formalization and informalization) for financial access. The empirical evidence is based on Generalised Method of Moments with 53 African countries for the period 2004-2011. The following findings are established from linkages between ICT, financial sector development and financial activity. First, the interaction between ICT and financial formalization (informalization) decreases (increases) financial activity. Second, with regards to net effects, the expected signs are established for the most part. In spite of the negative marginal effects from financial informalization, the overall net effects are positive. Third, the potentially appealing interaction between ICT and informalization produces positive thresholds that are within ranges. Policy implications are discussed in three main strands.

They include implications for:

(i) mobile/internet banking;

(ii) a quiet life and

(iii) ICT in reducing information asymmetry and surplus liquidity.

Keywords: Allocation Efficiency; Financial Sector Development; ICT

JEL Classification: G20; G29; L96; O40; O55

Suggested Citation

Asongu, Simplice and Nwachukwu, Jacinta, ICT, Financial Sector Development and Financial Access (January 1, 2017). Journal of the Knowledge Economy, 10(2), pp. 465–490 (2019). Available at SSRN: https://ssrn.com/abstract=2932034

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Jacinta Nwachukwu

Coventry University ( email )

Priory Street
Coventry, CV1 5FB
United Kingdom

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