ICT diffusion and the finance–growth nexus: a panel analysis on ECOWAS countries

In this study, we rely on the extension of the endogenous growth theory to consider the role of ICT diffusion in the finance–growth nexus theoretically informed via the supply-leading and demand-following theses. Motivated by current realities highlighting the significance of information and communication technologies (ICTs) to modern societies, the study evaluates the foregoing research objective in ECOWAS countries over the 2005–2016 period based on the justification of the ICT diffusion into the ECOWAS region around the early 2000s. Innovatively, the study constructs an ICT diffusion index covering fixed telephone lines, mobile cellular subscription and Internet penetration as relevant media for ICT dispersion. We adopt the pooled mean group estimator on a dynamic panel ARDL model for robust analysis of the subject matter. We find that financial development (its main and alternative measure) alone inhibits growth of ECOWAS countries, but its interaction with ICT diffusion promotes economic growth in the region. The implication of our research findings for the West African region is that financial sector development efforts have to be strengthened by investment in ICT infrastructure, improved Internet penetration and further integration of electronic finance policies.