Does The Use Of Ict Affect Interest Rates In Transition Economies?

Abstract

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