Banking Crises and Diffusion of Information and Communication Technologies

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JEL classification

• Financial Crises
• Technological Change: Choices and Consequences; Diffusion Processes
• Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models

Keywords

Banking Crises, Information and Communication Technologies, panel study.

Abstract

In this study, the relationship between Information and Communication Technologies (ICT) penetration and banking crises is investigated using a panel logit model of the incidence of banking crises. The period under investigation is between 1990 and 2011, and the largest sample of the study consists of 182 countries. For robustness, four ICT indicators and bivariate models, as well as multivariate models, are used. Our empirical investigation suggests that the diffusion of ICT technologies increases the possibility of banking crises, controlling for other factors that may cause banking crises. Among ICT indicators used in the study, the number of fixed broadband subscriptions per 100 people has the largest effect on the probability of a banking crisis. This paper contributes to the literature on banking crises by presenting the first empirical evidence on the relationship between ICT penetration and banking crises.