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Digital divide and financial development in Africa

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  • Mignamissi, Dieudonné
  • Djijo T., Audrey J.

Abstract

This paper analyses the influence of the digital divide on the new IMF financial development index on a panel of 34 African countries over the period 2005–2017. Using the instrumental variables technique, we arrive at the main result that ICT divide is a severe handicap for the financial systems development in Africa. The use of financial development sub-indices relating to financial institutions and financial markets, as well as their dimensions confirms the negative effect of the digital divide. Our result remains stable when we use alternative measures of financial development and ICT indicators. Furthermore, we found that the digital divide between countries is also a severe handicap for the financial development of countries lagging behind. On the other hand, countries with a technological lead or a digital dividend have relatively developed financial systems. Some recommendations have been suggested to promote digital penetration in Africa, as well as to improve the receptivity and flexibility of African financial systems.

Suggested Citation

  • Mignamissi, Dieudonné & Djijo T., Audrey J., 2021. "Digital divide and financial development in Africa," Telecommunications Policy, Elsevier, vol. 45(9).
    • Handle: RePEc:eee:telpol:v:45:y:2021:i:9:s0308596121001038
    DOI: 10.1016/j.telpol.2021.102199
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    Cited by:

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    4. Hermann Ndoya & Simplice A. Asongu, 2022. "Digital divide, globalization and income inequality in sub-Saharan African countries: analysing cross-country heterogeneity," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 20(1), pages 1-19, October.
    5. Alexandra Horobet & Irina Mnohoghitnei & Dan Gabriel Dumitrescu & Stefania Cristina Curea & Lucian Belascu, 2022. "An Empirical Assessment of the Financial Development – Environmental Quality Nexus in the European Union," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 613-613, August.
    6. Çetin, Murat & Sarıgül, Sevgi Sümerli & Işık, Cem & Avcı, Pınar & Ahmad, Munir & Alvarado, Rafael, 2023. "The impact of natural resources, economic growth, savings, and current account balance on financial sector development: Theory and empirical evidence," Resources Policy, Elsevier, vol. 81(C).
    7. Mansour Naser Alraja & Faris Alshubiri & Basel M. Khashab & Mahmood Shah, 2023. "The financial access, ICT trade balance and dark and bright sides of digitalization nexus in OECD countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 177-209, June.
    8. Lee, Chien-Chiang & Tang, Manting & Lee, Chi-Chuan, 2023. "Reaping digital dividends: Digital inclusive finance and high-quality development of enterprises in China," Telecommunications Policy, Elsevier, vol. 47(2).
    9. Bunje, Madinatou Yeh & Abendin, Simon & Wang, Yin, 2022. "The multidimensional effect of financial development on trade in Africa: The role of the digital economy," Telecommunications Policy, Elsevier, vol. 46(10).

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