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Mobile money adoption and response to idiosyncratic shocks: Empirics from five selected countries in sub-Saharan Africa

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  • Koomson, Isaac
  • Bukari, Chei
  • Villano, Renato A

Abstract

In sub-Saharan Africa, financial inclusion remains low, with households being more vulnerable to idiosyncratic shocks. Mobile money has been identified as having the potential to boost financial inclusion while closing the related gender- and rural-gaps in the process. Nonetheless, little is known about how mobile money facilitates the sending and receipt of financial support in times of idiosyncratic shocks. This study examines the link between mobile money adoption and response to idiosyncratic shocks from the perspectives of senders and receivers using comprehensive household data across five countries. Employing the number of mobile money agents in respondent's neighbourhood as instrument in an instrumental variable probit procedure, we find that adoption of mobile money is associated with an increase in the probability to send (receive) financial support to (from) families, friends, relatives, co-workers and acquaintances in times of idiosyncratic shocks but the sending effect outweighs that of the receiving. Overall, female-headed and rural-located households end up being the net beneficiaries of mobile money adoption when it comes to idiosyncratic shocks. Mobile money regulators and standard setting authorities are urged to engage with telecommunications companies and other stakeholders to deepen the digital financial ecosystem.

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  • Koomson, Isaac & Bukari, Chei & Villano, Renato A, 2021. "Mobile money adoption and response to idiosyncratic shocks: Empirics from five selected countries in sub-Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    • Handle: RePEc:eee:tefoso:v:167:y:2021:i:c:s0040162521001608
    DOI: 10.1016/j.techfore.2021.120728
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    Cited by:

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    2. Johnen, Constantin & Parlasca, Martin & Mußhoff, Oliver, 2023. "Mobile money adoption in Kenya: The role of mobile money agents," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    3. Jenny Aker & David A Carroll, 2022. "The State of Digital Financial Services in Francophone West Africa," Working Papers hal-03642499, HAL.
    4. Koomson, Isaac & Afoakwah, Clifford & Ampofo, Akwasi, 2022. "How does ethnic diversity affect energy poverty? Insights from South Africa," Energy Economics, Elsevier, vol. 111(C).
    5. Kofinti, Raymond Elikplim & Koomson, Isaac & Paintsil, Jones Arkoh & Ameyaw, Edward Kwabena, 2022. "Reducing children's malnutrition by increasing mothers' health insurance coverage: A focus on stunting and underweight across 32 sub-Saharan African countries," Economic Modelling, Elsevier, vol. 117(C).
    6. Apeti, Ablam Estel, 2023. "Household welfare in the digital age: Assessing the effect of mobile money on household consumption volatility in developing countries," World Development, Elsevier, vol. 161(C).
    7. Dzandu, Michael D. & Hanu, Charles & Amegbe, Hayford, 2022. "Gamification of mobile money payment for generating customer value in emerging economies: The social impact theory perspective," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    8. Avom, Désiré & Bangaké, Chrysost & Ndoya, Hermann, 2023. "Do financial innovations improve financial inclusion? Evidence from mobile money adoption in Africa," Technological Forecasting and Social Change, Elsevier, vol. 190(C).

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    More about this item

    Keywords

    Mobile money; Idiosyncratic shock; Financial inclusion; Vulnerability; Emergency;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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