The impact of ICT diffusion on sovereign cost of debt

Apostolos Kotzinos, Dimitris Psychoyios, Nikolaos Vlastakis

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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.

Original languageEnglish
Pages (from-to)16-51
Number of pages36
JournalInternational Journal of Banking, Accounting and Finance
Issue number1
Early online date20 Nov 2020
Publication statusPublished - 2021
Externally publishedYes


  • Credit ratings
  • Developing countries
  • E-readiness
  • ICT
  • Information and communication technologies
  • Sovereign debt

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