Investigation of the technological improvements impact on stock markets

After the 2000s, usage of the internet and Information and Communication Technology (ICT) are rapidly developing and it is affecting important areas of human beings. One of those areas is the financial field. In particular, the internet and ICTs make a great contribution to the infrastructure of the stock market's transit to electronic systems. Also it gives the opportunity for investors and other participants to the market easily and at low cost, to have the information without knowing time and place, to make optimal investment decisions. The aim of this study has tried to reveal the effect of individuals' usage of the internet and ICT on stock markets by covering G7 and E7 countries. It also aims to be one of the studies in the of financial world. Accordingly, the four stock market indicators were used as dependent variables which were stock market index, total market capitalization, stock traded total value and number of listed company. The six internet and ICT indicators were used as independent variables which were fixed telephone subscriptions, mobile telephone subscriptions, internet usage rate of individuals, rate of households with internet users, rate of households with computers and fixed broadband subscriptions. The study comprised the period for 2000-2019 with panel data analysis. In this paper, cross-section dependency test, stationarity test and homogeneity test were conducted between countries to test the relationship between individuals' ICT use and stock markets. As a result of the tests, second generation co-integration tests were applied. Then FMOLS model was used in order to obtain the coefficients in the model. As a result of the cointegration test, it has been revealed that there is a cointegration relationship between ICT variables and stock market variables, excluding fixed telephone subscription and fixed broadband subscription. According to the FMOLS model, it has been determined that the use of mobile phones and internet by individuals affect positively on the stock markets of G7 and E7 countries and these two variables are significant in the model. In addition, the variables of the ratio of households with internet users and the ratio of households with computers in the model were economically significant but not practically.