# ICT Adoption and Stock Market Development: Empirical Evidence Using a Panel of African Countries
## 4 Research Methodology
### Empirical Model Specification and Estimation Techniques  
This study adopted and modified the model of [PERSON] (2015) on ICT adoption and stock markets. The following models were specified to test the relationships between the stock market and ICT adoption variables:  
\[SMTV_{it} =\alpha_{0}+\alpha_{1}NBU_{it}+\ \alpha_{2}NMU_{it}+\ \alpha_{3} IU_{it}+\alpha_{4}NFTU_{it}+\alpha_{5}FFI_{it}+\alpha_{6} GDP_{it}+\mu_{it} \tag{1}\] \[SMC_{it} =\theta_{0}+\theta_{1}NBU_{it}+\ \theta_{2}NMU_{it}+\ \theta_{3} IU_{it}+\theta_{4}NFTU_{it}+\theta_{5}FFI_{it}+\theta_{6} GDP_{it}+\mu_{it}\] (2) \[SMTR_{it} =\gamma_{0}+\gamma_{1}NBU_{it}+\ \gamma_{2}NMU_{it}+\ \gamma_{3} IU_{it}+\gamma_{4}NFTU_{it}+\gamma_{5}FFI_{it}+\gamma_{6} GDP_{it}+\mu_{it}\] (3) \[NLC_{it} =\beta_{0}+\beta_{1}NBU_{it}+\ \beta_{2}NMU_{it}+\ \beta_{3} IU_{it}+\beta_{4}NFTU_{it}+\beta_{5}FFI_{it}+\beta_{6} GDP_{it}+\mu_{it} \tag{4}\]  
where:  
\(NBU\) = Number of broadband users;  
\(NMU\) = Number of mobile-telephone users;  
\(IU\) = Number of Internet users;  
\(NFTU\) = Number of fixed telephone users;  
\(SMTV\) = Stock market total value traded;  
\(SMC\) = Stock market capitalisation;  
\(SMTR\) = Stock market turnover ratio;  
\(NLC\) = Number of listed companies per 10,000 people;  
\(FFI\) = Financial freedom index;  
\(GDP\) = Gross domestic product  
\(\alpha_{0}\), \(\theta_{0}\), \(\gamma_{0}\) and \(\beta_{0}\) = each model model's intercepts, respectively;  
\(\alpha_{i}\), \(\theta_{i}\), \(\gamma_{i}\) and \(\beta_{i}\), where \(i\) = 1, 2, 3 and 4 and represent the coefficient of the model's explanatory variables. The Equations (1)-(4) specified above pose an issue when estimated using the ordinary least squares (OLS) method. There is the problem of endogeneity. To ensure that the estimated results were robust, the system-GMM and feasible generalised least squares (FGLS) estimators were also applied in estimation. \begin{table}
\begin{tabular}{c c} \hline
**Variable** & **Variable Definition** \\ \hline \multicolumn{3}{c}{**ICT Adoption Variables**} \\ \hline Number of Broadband Users (NBU) & NBU = Fixed broadband subscriptions per 100 inhabitants \\ \hline Number of Fixed Telephone Users (NFTU) & NFTU = Fixed telephone subscriptions per 100 inhabitants \\ \hline Internet Users (IU) & IU = Percentage of individuals using the Internet \\ \hline Number of Mobile Phone Users (NMU) & NMU= Mobile–telephone subscriptions per 100 inhabitants \\ \hline Stock Market Development Variables \\ \hline Stock Market Total Value Traded (SMTV) & SMTV = \begin{tabular}{c} Stock market total value traded \\ Gross Domestic Product \\ \end{tabular} \(\times\) 100\% \\ \hline Stock Market Capitalisation (SMC) & SMC = \
\begin{tabular}{c} Stock market capitalisation \\ Gross Domestic Product \\ \end{tabular} \(\times\) 100\% \\ \hline Stock Market Turnover Ratio (SMTR) & SMTR =
\begin{tabular}{c} Total value of shares traded \\ Market capitalisation \\ \end{tabular} \(\times\) 100\% \\ \hline Number of Listed Companies (NLC) & NLC = number of listed companies per 10, 000 people \\ \hline \multicolumn{3}{c}{**Control Variables**} \\ \hline Financial Freedom Index (FFI) & FFI = Financial freedom score \\ \hline Gross Domestic Product (GDP) & GDP = Real gross domestic product \\ \hline \end{tabular}
\end{table} 
Table 3: Variable definition. Generalised Method of Moments  
The dynamic model was specified as follows:  
\[\text{Y}_{it}{=}\ \alpha\text{Y}_{it-1}{+}\beta\text{X}_{it-1}{+}\mu_{i}{+}\epsilon_ {it} \tag{5}\]  
where:  
Y = Stock market development proxies, proxied by the number of listed firms (NLC), stock market capitalisation (SMC), the stock market value of shares traded (SMTV), the stock market turnover ratio (SMTR) and the stock market development index (FINDEX);  
X = A vector of explanatory variables (other than lagged stock market development);  
\(\mu\) = An unobserved country-specific effect;  
\(\varepsilon\) = The error term,  
and the subscripts \(i\) and \(t\) represent the country and the time period, respectively.