The Impact of Information and Communication Technologies (ICT) on Stock Price Synchronicity

This paper explores the role of ICT diffusion in the underlying causes of stock price synchronicity. By analyzing data from 2002 through 2019 for forty-seven countries, we find that stock price synchronicity is higher in countries with lower ICT diffusion. Furthermore, we discover that ICT diffusion weakens the relation between stock price synchronicity and economic activity. This suggests that ICT diffusion could mitigate cyclical fluctuations in stock price synchronicity. Lastly, we document that the effects of ICT diffusion on stock price synchronicity vary according to the ICT absorptive capacity of high-income and middle-income countries