MODERATING EFFECT OF ICT INVESTMENT ON THE RELATIONSHIP BETWEEN FIRM CHARACTERISTICS AND FIRM VALUE OF LISTED DEPOSIT MONEY BANKS IN SUB-SAHARAN AFRICA

Abstract

This study investigates the moderating effect of ICT investment on the relationship between firm characteristics—firm size, profitability, liquidity, and leverage—and firm value among listed deposit money banks in Sub-Saharan Africa. Using a quantitative research design, secondary data were obtained from 141 banks' annual financial reports spanning 2014–2023. Descriptive, correlation, and pooled regression analyses were employed. Findings reveal that firm size positively and consistently influences firm value, while ICT investment enhances this relationship indirectly through operational efficiency. Profitability increases firm value only when paired with ICT investment, emphasizing the importance of reinvesting profits into technology. Leverage negatively affects firm value due to financial risk, and ICT investment only marginally mitigates this effect. Liquidity becomes significant when combined with ICT, though excessive liquidity can lead to inefficiencies. The study concludes that firm size and ICT investment are major determinants of firm value in the region's banking sector. Banks are advised to reinvest profits in ICT, pursue growth to benefit from economies of scale, and maintain optimal liquidity and leverage levels to maximize market value and sustain competitiveness.

Keywords: Firm value, ICT investment, firm size, profitability, leverage and liquidity.