Title: The impact of ICT diffusion on sovereign cost of debt

Authors: Apostolos Kotzinos; Dimitris Psychoyios; Nikolaos Vlastakis

Addresses: Department of Industrial Management and Technology, University of Piraeus, 107 Deligiorgi Str., Piraeus, GR 185 34, Greece ' Department of Industrial Management and Technology, University of Piraeus, 107 Deligiorgi Str., Piraeus, GR 185 34, Greece ' Essex Business School, University of Essex, UK

Abstract: We examine the effect of a country's level of information and communication technologies (ICT) diffusion on its credit rating and cost of debt. ICT diffusion is approximated using the Networked Readiness Index, which is designed to capture a country's capacity and preparedness to participate in the digital economy. We adopt a modified random effects approach which allows us to distinguish between short and long run effects on a dataset of 65 countries for a time span of ten years. We show that ICT have a significant impact on a country's credit rating and cost of debt which is robust to the presence of other variables proposed in the literature. The effect is stronger for non-OECD countries, indicating a pathway for developing countries to improve their access to debt markets. Our conclusions are robust to the advent of the recent financial crisis.

Keywords: credit ratings; sovereign debt; information and communication technologies; ICT; e-readiness; developing countries.

DOI: 10.1504/IJBAAF.2021.111802

International Journal of Banking, Accounting and Finance, 2021 Vol.12 No.1, pp.16 - 51

Received: 06 Jul 2018
Accepted: 27 Jul 2019
Published online: 15 Dec 2020 *

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