Abstract

We examine whether improvements in telecommunications adoption in emerging markets are associated with more efficient financial markets. Using data from 20 emerging market countries, we measure telecommunications adoption through fixed broadband subscriptions, mobile cellular subscriptions, and telephone subscriptions per capita. Market efficiency is evaluated through three statistical approaches: runs tests, augmented Dickey–Fuller tests, and variance ratio tests. The results reveal that basic telecommunications (telephone and cellular networks) show stronger associations with market efficiency than broadband adoption, which shows zero correlation. This suggests that direct communication networks may be more fundamental than high-speed data access for how markets determine accurate prices. The implications for telecommunications investment policy in emerging markets are significant.

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