How New Technology Stimulated the Credit Supply in Africa

NICOLA LIMODIO OBTAINED A RESEARCH GRANT FROM PEDL TO UNDERSTAND THE CONSEQUENCES THAT THE ADOPTION OF NEW TECHNOLOGY HAS BROUGHT TO THE FINANCIAL MARKET IN A LOW INCOME COUNTRY

Nicola Limodio, Professor at Bocconi Department of Finance, obtained a £39,600 grant from Private Enterprise Development in Low-Income Countries (PEDL) for ‘‘High-Speed Internet, Financial Technology and Banking’’. The research project seeks to understand how the introduction of high-speed internet technology affected the banks in Africa.
 
‘‘New technologies, such as the real-time gross settlement system (RTGS), have stimulated financial and banking markets in Africa’’, according to Limodio. ‘‘This research tries to analyze how banks have benefited from the arrival of the internet in terms of managing their liquidity. From a preliminary analysis, it emerges that banks that adopted new technologies (RTGS) improved their bank liquidity management. Consequently, new technology enables banks to increase credit supply to businesses’’.
 
Private Enterprise Development in Low Income Countries (PEDL) is a joint research initiative of the Centre for Economic Policy Research (CEPR) and the Foreign, Commonwealth & Development Office (FCDO). Over the period 2011-23, it will pursue a research agenda focusing on private-sector development in low-income countries (LICs) for investigating what determines the strength of market forces driving efficiency in these countries.
 

by Weiwei Chen