The Impact of ICT on Financial Development: An Empirical Evidence from Syria

Abstract

The digital revolution affects all economic aspects and the financial sector is not an exception. Despite the wide evidence on the impact of Information, Communication, and Technology (ICT) on the financial sector development, this topic has yet to be researched in Syria. We investigate the impact of five proxies of ICT on financial development using multiple regression model for the period 2005 to 2017. We also conduct marginal effect analysis to identify the impact of penetration of mobile phones on the financial development with war and without it. We find that there is a significant positive impact of the number of mobile subscribers on the financial development index in Syria. This result is consistent with Alshubiri et al. (2019) who find that an increase in fixed broadband has a statistically significant and positive effect on financial development in GCC countries. However, the number of telephone subscribers has insignificant impact on the Syrian financial development. The war seems to have a significant negative impact on the financial development in Syria. In addition, we find that the marginal effect of mobile subscription on the financial development index without war is larger compared to the case with war. We conclude that digital transformation has great potentials for advancing the Syrian financial sector especially if accompanied with more investment in ICT infrastructure.