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Rethinking Ict And Financial Development: Does Digitalization Directly Hinder Economic Growth?

Author

Listed:
  • Tam Phan Huy

    (University of Economics and Law and Vietnam National University, Vietnam)

  • Vy Tran Thi Thuy

    (University of Economics and Law and Vietnam National University, Vietnam)

  • Phuong Nguyen Thi Thu

    (University of Economics and Law and Vietnam National University, Vietnam)

  • Bang Nguyen Thi Tuyet

    (University of Economics and Law and Vietnam National University, Vietnam)

  • Han Tran Song

    (University of Economics and Law and Vietnam National University, Vietnam)

  • Tien Vo Quoc

    (University of Economics and Law and Vietnam National University, Vietnam)

Abstract

This study examines the relationship between information and communication technology adoption, financial development, and economic growth, emphasizing the moderating role of credit availability. Using panel data for 180 countries from 2000 to 2022, comprising 2,590 observations from the World Bank, the study applies System GMM estimation to address potential endogeneity. The results show significant negative associations between information and communication technology adoption, credit expansion, and GDP growth. The interaction between technology adoption and credit availability is also negative, indicating that greater digitalization combined with financial deepening does not necessarily correspond to stronger economic growth. These findings are consistent with the Too Much Finance Hypothesis and suggest that rapid credit expansion and digital financial development may coincide with financial distortions. The study highlights the importance of financial governance, regulatory oversight, and institutional quality in supporting sustainable economic development.

Suggested Citation

  • Tam Phan Huy & Vy Tran Thi Thuy & Phuong Nguyen Thi Thu & Bang Nguyen Thi Tuyet & Han Tran Song & Tien Vo Quoc, 2026. "Rethinking Ict And Financial Development: Does Digitalization Directly Hinder Economic Growth?," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 51(3), pages 135-153, September.
    • Handle: RePEc:ris:jecdev:023663
    DOI: 10.35866/caujed.2026.51.3.006
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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