Abstract
The study investigated the impact of information and communication technology (ICT) and energy consumption on financial development in Africa using dynamic Generalised Methods of Moments (GMM) with secondary annual data spanning from 2001 to 2015. Literature is unanimous that ICT and energy consumption separately contributes towards financial development although there are so far scarce case studies which focused on the African continent. When domestic credit to private sector (% of GDP) was used as a measure of financial development, ICT and energy consumption were found to had a non-significant negative influence on financial development, a finding that contradicts majority of literature on the subject matter. When broad money (% of GDP) was used as a proxy of financial development, both ICT and energy consumption had a significant positive effect on financial development. The finding generally resonates with Kirmani et al (2015) whose study argued that ICT increases efficiency, reliability, effectiveness, performance and other characteristics of modern-day commercial operations through the way transactions are catered for in any financial system. African nations are therefore urged to increase their use of modern ICT technology and increase energy consumption in order to boost financial development. Future studies can also focus whether ICT and energy consumption influence financial development through other channels such as economic growth, among others.Keywords: Information and Communication Technology; Energy Consumption; Financial Development; AfricaJEL Classifications: N7, Q4, E44, O55DOI: https://doi.org/10.32479/ijeep.8721
Highlights
The results show that the bank profits declined due to the adoption and diffusion of IT investments, reflecting negative network effects in this industry The results indicated that information technology dimensions including IT knowledge, IT operations and IT infrastructures had significant effect (P
The study investigated the impact of ICT and energy consumption on financial development in Africa using dynamic generalised methods of moments (GMM) with secondary annual data spanning from 2001 to 2015
Literature is unanimous that ICT and energy consumption separately contributes towards financial development there are so far scarce case studies which focused on the African continent
Summary
Background of the Study Information and communication technology (ICT) is the use of computers to store, retrieve, transmit, and manipulate data, or information, often in the context of some business or other enterprises (Deb, 2014). Humans have been storing, retrieving, manipulating, and communicating information since the Sumerians in Mesopotamia developed writing in about 3000 BC, but the term ICT in its modern sense first appeared in a 1958 article published in the Harvard business review by authors Leavitt and Whisler (1958). Gaps Found in the Literature (Problem Statement) There is not much available empirical research on the impact of ICT and energy consumption on financial development. Empirical studies that investigated ICT-energy consumption-financial development nexus are quite scant, especially in the African context.
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