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The long-run relation among financial development, technology and GDP: a panel cointegration study

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  • A. G. Zagorchev
  • G. Vasconcellos
  • Y. Bae

Abstract

There has been a considerable increase in the use of Information and Communications Technology (ICT) across the globe since 1991. This article examines the dynamic relationship among financial development, ICT and Gross Domestic Product (GDP) per capita in a panel cointegration framework using 86 sample countries. The long-run relationships are identified using panel unit root tests, cointegration analysis and Dynamic Ordinary Least Squares (DOLS). The ICT indicators are proxied by the number of personal computers, Internet users and mobile phone subscribers. Our first finding is that personal computers and GDP per capita increase the liquidity, size and activity of financial systems. Second, the Internet and GDP per capita improve the liquidity, size, stock trading and activity of financial markets. Third, mobile phones and GDP per capita stimulate financial market liquidity, financial market size and credit expansion. The results provide a clear support for an equilibrium relation among financial development, ICT and GDP per capita.

Suggested Citation

  • A. G. Zagorchev & G. Vasconcellos & Y. Bae, 2011. "The long-run relation among financial development, technology and GDP: a panel cointegration study," Applied Financial Economics, Taylor & Francis Journals, vol. 21(14), pages 1021-1034.
    • Handle: RePEc:taf:apfiec:v:21:y:2011:i:14:p:1021-1034
    DOI: 10.1080/09603107.2011.562164
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    Cited by:

    1. Pradhan, Rudra P. & Arvin, Mak B. & Hall, John H., 2016. "Economic growth, development of telecommunications infrastructure, and financial development in Asia, 1991–2012," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 25-38.
    2. Zagorchev, Andrey & Vasconcellos, Geraldo & Bae, Youngsoo, 2011. "Financial development, technology, growth and performance: Evidence from the accession to the EU," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 21(5), pages 743-759.
    3. Andy Titus Okwu, 2016. "ICT and Stock Market Nexus in Africa: Evidence from Nigeria and South Africa," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(4), pages 38-50, August.
    4. Rodrigo Fernandes Malaquias & Fernanda Francielle de Oliveira Malaquias & Yujong Hwang, 2017. "The role of information and communication technology for development in Brazil," Information Technology for Development, Taylor & Francis Journals, vol. 23(1), pages 179-193, January.
    5. Gopane, Thabo J. & Gandanhamo, Tanyaradzwa & Mabejane, John-Baptiste, 2023. "Technology firms and capital structure adjustment: Application of two-step system generalised method of moments," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 70, pages 34-54.

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