IDEAS home Printed from https://ideas.repec.org/a/aiy/jnjaer/v21y2022i4p659-662.html
   My bibliography  Save this article

Mobile Money Services: An Enabler of Development Processes in Africa

Author

Listed:
  • James Okrah
  • Alexander N. Nepp

Abstract

Access to finance has been a major constraint in a lot of developing countries, especially in Africa. This research seeks to explore the role of mobile money in the development of the financial sector and its role in enforcing financial inclusiveness by making banking easily accessible and convenient. We look at data of сountries which operate mobile money credit facilities. Looking closely at how these loan services are increasing financial accessibility and the intensity of entrepreneurship, we hypothesize that mobile money positively influences entrepreneurship and domestic saving by providing an avenue for financial inclusiveness. To explore our objectives, we use panel data consisting of developing countries. With repeated observations of enough cross-sections, panel data analysis permits us to study the dynamics of change with time series. Our data consists of 28 developing countries from the year 2010 to 2018. Our results indicated a positive effect of mobile money registered accounts on new business density and positive effect of transactional volume on domestic savings. We realized that the mobile money system has increased people's confidence in saving and investment since their money is easily accessible with just a click away. People now feel much safer, and this system is educating more people rapidly in developing the culture of saving. This improves how banks treat their clients in rural communities and it also creates employment for young graduates. Access to loans has become much easier by replacing the collateral system with the credit score system. We also realized that since there are no regulations regarding access to loans, mobile money operators seem to take advantage of the people by taking interest rates of more than 10% per month.

Suggested Citation

  • James Okrah & Alexander N. Nepp, 2022. "Mobile Money Services: An Enabler of Development Processes in Africa," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 21(4), pages 659-662.
    • Handle: RePEc:aiy:jnjaer:v:21:y:2022:i:4:p:659-662
    DOI: http://dx.doi.org/10.15826/vestnik.2022.21.4.022
    as

    Download full text from publisher

    File URL: https://journalaer.ru//fileadmin/user_upload/site_15934/2022/01_Okrakh_Nepp.pdf
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.15826/vestnik.2022.21.4.022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Philippe Aghion & Peter Howitt & David Mayer-Foulkes, 2005. "The Effect of Financial Development on Convergence: Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(1), pages 173-222.
    2. Thorsten Beck & Asli Demirgüç-Kunt & Patrick Honohan, 2009. "Access to Financial Services: Measurement, Impact, and Policies," The World Bank Research Observer, World Bank, vol. 24(1), pages 119-145, February.
    3. Sandra E. Black & Philip E. Strahan, 2002. "Entrepreneurship and Bank Credit Availability," Journal of Finance, American Finance Association, vol. 57(6), pages 2807-2833, December.
    4. Bedman Narteh & Mahmoud Abdulai Mahmoud & Simon Amoh, 2017. "Customer behavioural intentions towards mobile money services adoption in Ghana," The Service Industries Journal, Taylor & Francis Journals, vol. 37(7-8), pages 426-447, June.
    5. Jenny C. Aker & Isaac M. Mbiti, 2010. "Mobile Phones and Economic Development in Africa," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 207-232, Summer.
    6. Nick Hughes & Susie Lonie, 2007. "M-PESA: Mobile Money for the "Unbanked" Turning Cellphones into 24-Hour Tellers in Kenya," Innovations: Technology, Governance, Globalization, MIT Press, vol. 2(1-2), pages 63-81, April.
    7. Bert D'Espallier & Marek Hudon & Ariane Szafarz, 2016. "Aid Volatility and Social Performance in Microfinance," Working Papers CEB 16-015, ULB -- Universite Libre de Bruxelles.
    8. Emmanuel K.K. Lartey, 2016. "The Cyclicality Of Remittances In Sub-Saharan Africa," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 41(1), pages 1-18, March.
    9. Mihasonirina Andrianaivo & Kangni Kpodar, 2012. "Mobile Phones, Financial Inclusion, and Growth," Review of Economics and Institutions, Università di Perugia, vol. 3(2).
    10. Hause, John C & Du Rietz, Gunnar, 1984. "Entry, Industry Growth, and the Microdynamics of Industry Supply," Journal of Political Economy, University of Chicago Press, vol. 92(4), pages 733-757, August.
    11. Tchakoute-Tchuigoua, Hubert, 2010. "Is there a difference in performance by the legal status of microfinance institutions?," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(4), pages 436-442, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emmanuel Kofi Penney & James Agyei & Eric Kofi Boadi & Eugene Abrokwah & Richmond Ofori-Boafo, 2021. "Understanding Factors That Influence Consumer Intention to Use Mobile Money Services: An Application of UTAUT2 With Perceived Risk and Trust," SAGE Open, , vol. 11(3), pages 21582440211, June.
    2. Thorsten Beck & Asli Demirguc‐Kunt & Luc Laeven & Ross Levine, 2008. "Finance, Firm Size, and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(7), pages 1379-1405, October.
    3. Thornton Matheson & Patrick Petit, 2021. "Taxing telecommunications in developing countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(1), pages 248-280, February.
    4. Laeven, Luc & Levine, Ross & Michalopoulos, Stelios, 2015. "Financial innovation and endogenous growth," Journal of Financial Intermediation, Elsevier, vol. 24(1), pages 1-24.
    5. Ghosh, Saibal, 2016. "Does mobile telephony spur growth? Evidence from Indian states," Telecommunications Policy, Elsevier, vol. 40(10), pages 1020-1031.
    6. Coulibaly, Aïssata & Yogo, Urbain Thierry, 2020. "The path to shared prosperity: Leveraging financial services outreach to create decent jobs in developing countries," Economic Modelling, Elsevier, vol. 87(C), pages 131-147.
    7. Michiel Bijlsma & Andrei Dubovik, 2014. "Banks, Financial Markets and Growth in Developed Countries: a Survey of the empirical literature," CPB Discussion Paper 266, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Jonathan Munemo, 2015. "Foreign Direct Investment, Business Start-up Regulations, and Entrepreneurship in Africa," Economics Bulletin, AccessEcon, vol. 35(1), pages 1-13.
    9. Duqi, Andi & McGowan, Danny & Onali, Enrico & Torluccio, Giuseppe, 2021. "Natural disasters and economic growth: The role of banking market structure," Journal of Corporate Finance, Elsevier, vol. 71(C).
    10. Mohammad Reza Farzanegan, 2012. "Resource Wealth and Entrepreneurship: A Blessing or a Curse?," MAGKS Papers on Economics 201224, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    11. Godsway Korku Tetteh, 2023. "Local digital lending development and the incidence of deprivation in Kenya," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-26, December.
    12. Niels Hermes & Marek Hudon, 2018. "Determinants Of The Performance Of Microfinance Institutions: A Systematic Review," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1483-1513, December.
    13. Florian LEON, 2015. "What do we know about the role of bank competition in Africa?," Working Papers 201516, CERDI.
    14. Juma Buhimila Mabula & Han Dong Ping & Moshi James, 2023. "The Impact of African Firms’ Utilization of Financial and Technology Resource on Innovation: A Simple Mediation," SAGE Open, , vol. 13(1), pages 21582440231, February.
    15. Munemo, Jonathan, 2017. "Foreign direct investment and business start-up in developing countries: The role of financial market development," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 97-106.
    16. Ahmad Hassan Ahmad & Christopher Green & Fei Jiang, 2020. "Mobile Money, Financial Inclusion And Development: A Review With Reference To African Experience," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 753-792, September.
    17. Jonathan Munemo, 2018. "Entrepreneurial Success in Africa: How Relevant Are Foreign Direct Investment and Financial Development?," African Development Review, African Development Bank, vol. 30(4), pages 372-385, December.
    18. Dustin Chambers & Jonathan Munemo, 2019. "Regulations, institutional quality and entrepreneurship," Journal of Regulatory Economics, Springer, vol. 55(1), pages 46-66, February.
    19. Scott Burns, 2018. "M‐Pesa and the ‘Market‐Led’ Approach to Financial Inclusion," Economic Affairs, Wiley Blackwell, vol. 38(3), pages 406-421, October.
    20. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.

    More about this item

    Keywords

    Mobile Money; entrepreneurship; developing economies; development; financial inclusion; digital financial service.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aiy:jnjaer:v:21:y:2022:i:4:p:659-662. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalia Starodubets (email available below). General contact details of provider: https://edirc.repec.org/data/seurfru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.