ICT and Information Asymmetry; New Evidence of the Financial System in Selected MENA Countries

The present study aims to investigate the role of ICT in reducing the effect of information asymmetry on financial development. The research's data associated with the selected countries of MENA during the timeframe of 2004-2015 are extracted from the official sources. Then, the research model is evaluated in the short- and long-term using the dynamic generalized method of moments and FMOLS, respectively. First, the results show information asymmetries negatively affect financial development. Second, ICT reduces but cannot eliminate the negative effect of information asymmetry on financial development. Third, the threshold effect of ICT on the information asymmetry and thus on financial development was within the minimum and maximum ICT indices. Due to the role of ICT in reducing the information asymmetry in the financial system of the examined countries, the policy proposal of this paper is to expand the various areas of access, benefit, and use of ICT in the financial sector.