Empirical Analysis of the Relationship Between Financial Development and ICT Infrastructure Development in Sub-Saharan Africa

Emmanuel Baffour Gyau, Paschal P. Paaga, Ernest Asimeng and Bright Boadu
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Emmanuel Baffour Gyau: School of Finance and Economics, Jiangsu University, Zhenjiang,212013, Jiangsu Province, China
Paschal P. Paaga: IT Department, Airtel Tigo, Accra, Ghana
Ernest Asimeng: School of Computer Science and Communication Engineering, Jiangsu University, Zhenjiang,212013, Jiangsu Province, China
Bright Boadu: School of Management, Jiangsu University, Zhenjiang, Jiangsu University, Zhenjiang,212013, Jiangsu Province, China

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 8, 629-641

Abstract: This study investigates the impact of financial development on information and communication technology (ICT) in sub-Saharan Africa. The analysis utilizes a panel dataset comprising 48 countries from the region and employs the bootstrap ordinary least squares (OLS) technique to ensure accurate and robust results. The findings reveal a significant and positive relationship between financial development and ICT indicators. Panel unit root tests indicate a combination of non-stationary behavior and stationarity after differencing the variables. Panel cointegration tests confirm a long-run, continuous cointegration between financial development and ICT infrastructure. The empirical results demonstrate significant cointegration between financial development and various ICT indicators, including internet usage, mobile subscriptions, telephone subscriptions, and fixed broadband subscriptions. The bootstrap OLS method further reveals that financial development has a statistically significant impact on the development of these ICT indicators. The results are robust, as confirmed by the Driscoll-Kraay standard errors regression. Based on these findings, policy recommendations are provided to enhance the synergy between financial development and ICT in sub-Saharan Africa, including promoting financial inclusion, investing in ICT infrastructure, strengthening financial sector regulations, fostering public-private partnerships, investing in digital skills and education, and supporting entrepreneurship and innovation.

Date: 2023
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