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Correlative and asymmetric effects of information technology on capital flows

Author

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  • Samson Edo

    (University of Benin)

  • Eseosa Joy Sowemimo

    (University of Benin)

Abstract

The study in this paper investigates how information technology (IT), directly and indirectly, affects capital flows to Sub-Saharan African countries. It also examines the asymmetric effects of IT on capital flows. The general method of moments methodology is employed to estimate a decomposed model of capital flows, which produced results that clearly show the correlative effect of IT is relatively more significant, compared to the effects of other explanatory variables. Furthermore, the results reveal appreciable asymmetric effects of IT on capital flows and the components, with the effects found to be uneven and dissimilar. It is also revealed that capital flows and the components reinforced themselves over time. The salutary effects of IT on capital flows, therefore, need to be sustained. In order to achieve this goal, economic policies should be fashioned to drive the deepening of IT, stable policy environment, synergy among determinants of capital flows, usage of advanced IT in financial markets, awareness of investment opportunities in a real sector, and application of IT in weak sectors. Such policies are most likely to sustain and improve upon the current trend of capital flows to Sub-Saharan Africa.

Suggested Citation

  • Samson Edo & Eseosa Joy Sowemimo, 2021. "Correlative and asymmetric effects of information technology on capital flows," Netnomics, Springer, vol. 22(2), pages 231-257, December.
    • Handle: RePEc:kap:netnom:v:22:y:2021:i:2:d:10.1007_s11066-022-09154-6
    DOI: 10.1007/s11066-022-09154-6
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