The Long-Term Impact of Digitalization on Financial Market Development in Sub-Saharan Africa

This study examines the relationship between digitalization and financial market development in nine sub-Saharan Africa countries over the period 1996-2024. It uses an error correction model estimated by the Pooled Mean Group method and the cointegration approach developed by Kao. Two specifications are estimated based on the measure of digitalization: internet access and mobile phone access. Our results show that in both specifications, digitalization, trade openness, economic growth, and FDI have a positive impact on long-term financial market development. These results are reinforced by the existence of a bidirectional causal link between financial market development and digitalization. This study suggests that digitalization, as approximated by internet access and mobile telephony, is an effective tool for improving the financial market development process in the selected sub-Saharan Africa countries.