Technology Adoption and the Financial Market Performance in Nigeria and South Africa

Purpose: Technology adoption is increasingly important for the effective operation of the financial market in the world. It is pertinent to investigate the nexus between technology adoption and financial market performance in Nigeria and South Africa. Design/Methodology/Approach: Country-specific and panel econometric techniques were used to study the nexus between technology adoption and financial market performance in Nigeria and South Africa. The technology diffusion theory which states that the continuous usage of a particular technology tends to lead to an equilibrium path over a given period is the foundational theory on which this study is based. Technology adoption index (TECH) and financial market performance index (FMP) were generated using the principal component analysis while variables such as “gross domestic product (GDP), domestic credit to the private sector (CPS), bank deposit rate (BDR) and bank lending rate (BLR)” were used as control variables. Data for all variables were gotten from the World Bank and the Heritage database. Findings: The study reveals that for country-specific analysis, technology adoption has a strong and direct impact on the financial market performance in Nigeria while in South Africa, technology adoption negatively and significantly impacts financial market performance. But, the panel estimation reveals that technology adoption positively and significantly promotes the financial market performance of both Nigeria and South Africa respectively. Implications/Research Limitation: The study focused on the nexus between technology adoption and financial market performance in Nigeria and South Africa. Practical Implication: The policy implication emanating from this study is that an increase in technology adoption has a robust and important influence on the financial market in Nigeria only but as soon as the two countries deepened the operation of their financial market through the removal of restrictions, then, technology adoption will significantly promote the financial market performance in both Nigeria and South Africa. Originality/Value: This study expanded the frontiers of knowledge on how the removal of cross-border restrictions in the financial market through technology adoption will significantly promote the financial market of the two countries. This finding also supports the arguments for a deepened economic relationship among African economies.