ICT Adoption and Stock Market Development: Empirical Evidence Using a Panel of African Countries

Abstract

The aim of this study was to examine the impact of adopting information and communication technologies (ICT) on the development of African stock exchanges. The study examined a panel of 11 African stock exchanges for the period 2008–2017 and employed the generalised method of moments (GMM) to estimate the results. The results of the study documented that ICT adoption had a positive impact on stock market development in African countries. Firstly, it was found that the stock market traded volume and mobile–telephone user variables were positively related. Secondly, a positive relationship was also proven between the stock market traded volume and the broadband user variable. Thirdly, a positive relationship was documented between the stock market capitalisation variable and the fixed telephone user variable. Fourthly, the research findings confirmed a positive relationship between the stock market turnover ratio and the fixed telephone user variable. The findings of this study imply that policymakers should be more resolute when formulating ICT policies. ICT adoption can spur stock market development which in turn can propel economic growth, resulting in the economic prosperity of the African countries. Moreover, ICT adoption could enhance the integration of African stock exchanges, further buttressing the drive towards the common market areas in various regions.