Inflation and the Adoption of Financial Technology

Since the mid-1960's, computerized technology has been continuously changing payment systems world-wide. However, the level of technological sophistication in the banking sector, and the timing of the new computerized Financial technologies implementation, significantly differ across countries. Some of the observed cross-country variation can be traced to differences in the countries wealth. To examine the relationship between financial technology, wealth and the rate of inflation among countries with similar inflation histories, wealthier ones tend to have larger ATM networks. However, when wealth alone is used to predict the level of a country's technological sophistication in the financial sector, the results indicate that other factors, such as inflation, must be involved. For example, countries that have experienced hyperinflation, such as Turkey, have implemented more ATMs than their wealth per capita would predict while countries such as Saudi Arabia that have experienced long periods of deflation have purchased fewer ATMs, and at much later date, than would have been predicted by their wealth. In fact,demonstrates, both inflation and per capital income are significant predictors of the number of ATMs per 1000 persons in a country.