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The impact of ICT diffusion on sovereign cost of debt

Author

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  • Apostolos Kotzinos
  • Dimitris Psychoyios
  • Nikolaos Vlastakis

Abstract

We examine the effect of a country's level of information and communication technologies (ICT) diffusion on its credit rating and cost of debt. ICT diffusion is approximated using the Networked Readiness Index, which is designed to capture a country's capacity and preparedness to participate in the digital economy. We adopt a modified random effects approach which allows us to distinguish between short and long run effects on a dataset of 65 countries for a time span of ten years. We show that ICT have a significant impact on a country's credit rating and cost of debt which is robust to the presence of other variables proposed in the literature. The effect is stronger for non-OECD countries, indicating a pathway for developing countries to improve their access to debt markets. Our conclusions are robust to the advent of the recent financial crisis.

Suggested Citation

  • Apostolos Kotzinos & Dimitris Psychoyios & Nikolaos Vlastakis, 2021. "The impact of ICT diffusion on sovereign cost of debt," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 12(1), pages 16-51.
    • Handle: RePEc:ids:injbaf:v:12:y:2021:i:1:p:16-51
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