Digital Divide and Bank Performance in the Economic and Monetary Community of Central Africa ZONE

Abstract

Improving the performance of financial institutions has been an ongoing interest in the literature. The theoretical literature is positive about the role of digitization very little work postulates a role for the digital divide. Also, in developing countries such as those of the Economic and Monetary Community of Central Africa (CEMAC), access to digital services remains a key problem. In order to contribute to this literature gap, The objective of this paper is to analyse the effect of the digital divide on the financial performance of banks in the Economic and Monetary Community of Central Africa (CEMAC) over the period 1993 to 2022. To this end, we have estimated a panel data model with the Fixed Effect Ordinary Least Square regressor technique of Driscoll &Kraay (1998). The results show that digital divide has negative effect on the Banking financial performance in the CEMAC zone. This remains the same when the digital divide index is disaggregated into its various dimensions, including the mobile, broadband, internet and fixed telephone divides. The results are robust despite the use of an alternative indicator of the digital divide. This leads to recommendations for improving the access of economic agents to digital services.