## Financial Development, the Structure of Capital Markets, and the Global Digital Divide

_IMF Working Papers, November 1, 2006_

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## Bibliographic details
- Authors: Charles Amo Yartey
- Published: November 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451865189.001

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### Summary and central findings
- The paper examines the role of financial development and financial structure in explaining cross-country diffusion of information communication technology (ICT).
- Using panel data for 76 emerging and advanced countries for the period 1990-2003, the paper finds that credit and stock market development tends to foster ICT development.
- Financial structure, however, does not appear to have any significant relationship with ICT development.
- The conclusions highlight the role of financial development in the market for knowledge-based products and are consistent with theoretical predictions.
- The finding that financial development is an important determinant of ICT development implies that countries with underdeveloped financial markets may continue to lag behind in the use of ICT.

### Methodology and data
- Empirical approach: panel data analysis.
- Sample coverage: 76 emerging and advanced countries.
- Time period: 1990-2003.
- Dependent variable: ICT development / ICT diffusion (panel ICT model).

### Policy implications and interpretation
- Strengthening credit markets and stock market development is associated with greater ICT development.
- Policies aimed at advancing financial development can support diffusion of knowledge-based products such as ICT.
- Because financial structure shows no significant relationship with ICT development in this analysis, policy focus should remain on overall financial development rather than on altering financial structure as a primary mechanism for accelerating ICT diffusion.
- Countries with underdeveloped financial markets face a risk of continued lagging in ICT adoption.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/financial-development-the-structure-of-capital-markets-and-the-global-digital-divide-19924_