Abstract

We exploit the staggered arrival of submarine cables in Africa to study how high-speed internet affects financial technology and banking. Combining country and bank reports with a machine-learning algorithm, we build a dataset on a technology central for bank intermediation: the real-time gross settlement system (RTGS). High-speed internet increases RTGS adoption, leading banks to lower liquidity hoarding, increase interbank transactions and private-sector lending. We identify a distinct credit supply channel through banks connected to high-speed internet both through their multinational network and country of operation. RTGS adoption produces real effects on firms in countries with weak pre-existing interbank markets.