Abstract
The paper explores the relationship between education, digitalization, and financial development between 1996 and 2019 with the aim of showcasing the differences between developed and emerging economies in Europe. We use a Bayesian VAR framework that includes variables related to education, digitalization, and financial development, as well as several endogenous variables to control for differences between countries in terms of nominal GDP growth, unemployment rate, and trade openness. Our findings clearly demonstrate the dynamic interdependence between financial development—including its two main components, financial institutions, and financial markets, digitalization, and education. Furthermore, we find that education is a leading variable in the financial development–education–digitalization nexus, whereas financial development and digitalization are laggard variables. These findings open possibilities for influencing joint policies on digitalization, education, and financial development, particularly in emerging European countries.
Highlights
Digitalization has grown rapidly over the last few decades
Many emerging European countries have seen high levels of digitalization in recent years, but less progress has been made regarding the levels of education and financial development. This emphasizes the relevance of our research, as our findings clearly demonstrate the dynamic interaction between financial development—including its two main components, financial institutions and financial markets, digitalization, and education, and that education is a leading variable in the financial development–education–digitalization nexus, whereas financial development and digitalization are laggard variables
This paper empirically examines the link between financial development, education, and digitalization, by analyzing a group of 32 European countries during 1996 and 2019, of which 27 are current European Union members
Summary
Bank (2021), only 4.6% of the world’s population used the internet in 1999, compared to 25.5% in 2009 and 56.7% in 2019. There were 8.1 mobile cellular subscriptions per 100 people in 1999, compared to 67.5 per 100 people in 2009, while in 2019, on average, every person had more than one mobile cellular subscription (109.5 per 100 people). In 2021, and in line with previous years, Denmark, Finland, and Sweden have been ranked the EU countries with the most advanced digital economies, with Romania and Bulgaria at the opposite end of the spectrum. This held true across most four dimensions captured by DESI—human capital, connectivity, integration of digital technology, and digital public services
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