Open AccessThe Effects of Information Communication Technology on Stock Market Capitalization: A Panel Data Analysis
Author(s) -
Sang Lee,
Matthew Alford,
John E. Cresson,
Lara Gardner
Publication year - 2017
Publication title -
business and economic research
Language(s) - English
Resource type - Journals
ISSN - 2162-4860
DOI - 10.5296/ber.v7i1.10936
Subject(s) - capitalization , market capitalization , stock market , information and communications technology , panel data , business , premise , empirical research , stock (firearms) , financial economics , investment (military) , investment decisions , economics , industrial organization , finance , econometrics , computer science , behavioral economics , philosophy , law , linguistics , horse , world wide web , engineering , biology , paleontology , epistemology , political science , mechanical engineering , politics
The level of investment in information communication technologies (ICT) that may affect stock market capitalization varies substantially across countries. Using data on 81 countries from 1998 to 2014, we use a country-fixed effects model to estimate the relationship between ICTs and stock market capitalization. Our empirical model is built on the premise that (1) increased deployment of ICT allows financial market participants to make more informed decisions at reduced inherent risks associated with deficient information or uncertainty in financial markets; and (2) increased access to and use of information communication technologies is expected to improve a country's economic fundamentals. The empirical results support our hypothesis that ICT expansions are positively associated with stock market capitalization.