Does The Use Of Ict Affect Interest Rates In Transıtıon Economıes

Abstract

This study empirically analyzes the association between the level of ICT-use and interest rates in transition economies. We hypothesized that an increase in ICT penetration level lowers interest rates in an economy. In order to test this hypothesis, we utilize four different proxies for ICT and two distinct indicators for interest rate. The study conducts panel data analysis and uses unbalanced data containing 24 years between 1990 and 2013. The size of samples varies from model to model and the largest sample includes 402 observations of 22 transition economies. After taking into consideration other macroeconomic determinants peculiar to interest rate, our primary finding reveals a strong and statistically significant negative association between ICT-use level and interest rate in these economies. This finding remains valid no matter which indicator is used for ICT penetration and interest rate in the models. Hence our results are robust.

Keywords

• ICT,Interest rate,Panel data,Transition Economies

References

1. Antonopoulos, C., Sakellaris, P. (2009). The contribution of Information and Communication Technology investments to Greek economic growth: An analytical growth accounting framework. Information Economics and Policy, 21, 171–191.
2. Bakhshi, H, Larsen, J. (2005). ICT-specific technological progress in the United Kingdom. Journal of Macroeconomics, 27, 648–669.
3. Chinn, M. D., Fairlie, R. W. (2010). ICT Use in the Developing World: An Analysis of Differences in Computer and Internet Penetration. Review of International Economics, 18(1), 153–167.
4. Engelbrecht, H. J., Xayavong, V. (2006). ICT intensity and New Zealand’s productivity malaise: Is the glass half empty or half full? Information Economics and Policy, 18, 24–42.
5. Jalava, J., Pohjola, M. (2008). The roles of electricity and ICT in economic growth: Case Finland. Explorations in Economic History, 45, 270–287.
6. Jorgenson, D. (2001). Information technology and the US economy. American Economic Review, 91(1), 1–32.
7. Jorgenson, D., Stiroh, K. (1995). Computers and growth. Economics of Innovation and New Technology, (3–4), 295–316.
8. Jorgenson, D., Stiroh, K. (1999). Information technology and growth. American Economic Review, 89(2), 109–115.

9. Jorgenson, D., Motohashi, K. (2005). Information technology and the Japanese economy. Journal of the Japanese and International Economies, 19(4), 460–481.
10. Lopez-Pueyo, C., Barcenilla-Visus, S., Sanau, J. (2008). International R&D spillovers and manufacturing productivity: A panel data analysis. Structural Change and Economic Dynamics, 19, 152–172.
11. Martinez, D., Rodriguez, J., Torres, J. (2010). ICT-specific technological change and productivity growth in the US: 1980–2004. Information Economics and Policy, 22(2), 121–129.
12. Mathur, A., Ambani, D. (2005). ICT and rural societies: Opportunities for growth. International Information & Library Review, 37(4), 345-351, DOI: 10.1080/10572317.2005.10762692.
13. Meng, Q., Li, M. (2002). New Economy and ICT development in China. Information Economics and Policy, 14, 275–295.
14. Ogutu, S. O., Okello, L. J., Otieno, D. J. (2014). Impact of Information and Communication Technology-Based Market Information Services on Smallholder Farm Input Use and Productivity: The Case of Kenya. World Development, 64, 311–321.
15. Oliner, S., Sichel, D. (1994). Computers and output growth revisited: How big is the puzzle? Brookings Papers on Economic Activity, 2, 273–317.
16. Oliner, S., Sichel, D. (2000). The resurgence of growth in the late 1990s: Is information technology the story? Journal of Economic Perspectives, 14(4), 3–22.
17. Oliner, S., Sichel, D. (2003). Information technology and productivity: Where are we now and where are we going? Journal of Policy Modeling, 25(5), 477–503.
18. Oulton, N. (2012). Long term implications of the ICT revolution: Applying the lessons of growth theory and growth accounting. Economic Modelling, 29, 1722–1736.
19. Thadaboina, V. (2009). ICT and Rural Development: a Study of Warana Wired Village Project in India. Transit Stud Rev, 16, 560–570, DOI 10.1007/s11300-009-0092-z.
20. Yartey, C. A. (2008). Financial development, the structure of capital markets, and the global digital divide. Information Economics and Policy, 20, 208–227.Yi, M. H., Choi, C. (2005). The effect of the Internet on inflation: Panel data evidence. Journal of Policy Modeling, 27, 885–889.