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- Title
High-Speed Internet, Financial Technology, and Banking.
- Authors
D'Andrea, Angelo; Limodio, Nicola
- Abstract
Exploiting the staggered arrival of fiber-optic submarine cables, we show that high-speed internet promotes the role of banks and credit in Africa. Variation within country and across multicountry bank networks indicates that high-speed internet induced a 22% expansion in credit supply. We investigate the role of plummeting telecommunication costs in promoting the bank adoption of new financial technologies and study a specific technology used in the interbank market, the real-time gross settlement system (RTGS). We find that upon connecting to high-speed internet, banks adopt the RTGS more extensively, reduce inside liquidity, and increase interbank transactions and lending. We also observe that high-speed internet particularly strengthens firms in countries with weak preexisting interbank markets. This paper was accepted by David Sraer, finance. Funding: This work was supported by a Private Enterprise Development in Low Income Countries (PEDL) of the Centre for Economic Policy Research (CEPR) grant and Università Bocconi. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4703.
- Subjects
UNIVERSITA Commerciale Luigi Bocconi; FINANCIAL technology; ONLINE banking; LOW-income countries; INTERBANK market; INTERNET; SUBMARINE cables; FREE enterprise
- Publication
Management Science, 2024, Vol 70, Issue 2, p773
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2023.4703