IDEAS home Printed from https://ideas.repec.org/a/bla/ecaffa/v38y2018i3p406-421.html
   My bibliography  Save this article

M‐Pesa and the ‘Market‐Led’ Approach to Financial Inclusion

Author

Listed:
  • Scott Burns

Abstract

Inclusive financial systems play a critical role in fostering economic growth and development. However, the question of what is the best means of achieving this has long been a puzzle. In this article, I use the mobile money revolution in Sub‐Saharan Africa to show that the greatest examples of financial development have come from nations embracing a market‐led approach that removes repressive regulations and gives entrepreneurs the freedom to discover innovative ways to access the unbanked. Comparing the successes and failures of mobile money across the continent over the past decade, I argue that the best predictor of whether a country will reap the benefits of these transformative innovations is whether its government embraces a laissez‐faire, or ‘enabling’, regulatory approach that encourages entrepreneurship and experimentation.

Suggested Citation

  • Scott Burns, 2018. "M‐Pesa and the ‘Market‐Led’ Approach to Financial Inclusion," Economic Affairs, Wiley Blackwell, vol. 38(3), pages 406-421, October.
    • Handle: RePEc:bla:ecaffa:v:38:y:2018:i:3:p:406-421
    DOI: 10.1111/ecaf.12321
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecaf.12321
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ecaf.12321?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. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    2. Thorsten Beck & Samuel Munzele Maimbo & Issa Faye & Thouraya Triki, 2011. "Financing Africa : Through the Crisis and Beyond," World Bank Publications - Books, The World Bank Group, number 2355, December.
    3. 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.
    4. Ignacio Mas, 2009. "The Economics of Branchless Banking," Innovations: Technology, Governance, Globalization, MIT Press, vol. 4(2), pages 57-75, April.
    5. Mothobi, Onkokame & Grzybowski, Lukasz, 2017. "Infrastructure deficiencies and adoption of mobile money in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 40(C), pages 71-79.
    6. Aparna Gosavi, 2015. "The Next Frontier of Mobile Money Adoption," The International Trade Journal, Taylor & Francis Journals, vol. 29(5), pages 427-448, December.
    7. Rosengard, Jay, 2016. "A Quantum Leap over High Hurdles to Financial Inclusion: The Mobile Banking Revolution in Kenya," Working Paper Series 16-032, Harvard University, John F. Kennedy School of Government.
    8. 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.
    9. World Bank, 2014. "Global Financial Development Report 2014 : Financial Inclusion," World Bank Publications - Books, The World Bank Group, number 16238, December.
    10. World Bank, 2008. "Finance for All? Policies and Pitfalls in Expanding Access," World Bank Publications - Books, The World Bank Group, number 6905, December.
    11. Thorsten Beck & Lemma Senbet & Witness Simbanegavi, 2015. "Financial Inclusion and Innovation in Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies, vol. 24(suppl_1), pages 3-11.
    12. Asli Demirgüç-Kunt, 2014. "Presidential Address: Financial Inclusion," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(4), pages 349-356, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leo Van Hove & Antoine Dubus, 2019. "M-PESA and Financial Inclusion in Kenya: Of Paying Comes Saving?," Sustainability, MDPI, vol. 11(3), pages 1-26, January.

    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. Rouse, Marybeth & Verhoef, y Grietjie, 2017. "Mobile banking in Sub-Saharan Africa: setting the way towards financial development," MPRA Paper 78006, University Library of Munich, Germany.
    2. Thorsten Beck & Samuel Munzele Maimbo & Issa Faye & Thouraya Triki, 2011. "Financing Africa : Through the Crisis and Beyond," World Bank Publications - Books, The World Bank Group, number 2355, December.
    3. Salem Hathroubi, 2019. "Inclusive Finance, Growth and Socio-Economic Development in Saudi Arabia: A Threshold Cointegration Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 44(2), pages 77-111, June.
    4. Oluwarotimi Ayokunnu Owolabi & Asa-Ruth Oboku Oku & Abidemi Alejo & Toun Ogunbiyi & Jeremiah Ifeanyi Ubah, 2021. "Access to Electricity, Information and Communications Technology (ICT), and Financial Development: Evidence From West Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 247-259.
    5. Michael King, 2012. "Is Mobile Banking Breaking the Tyranny of Distance to Bank Infrastructure? Evidence from Kenya," The Institute for International Integration Studies Discussion Paper Series iiisdp412, IIIS.
    6. Alfonso Siano & Lukman Raimi & Maria Palazzo & Mirela Clementina Panait, 2020. "Mobile Banking: An Innovative Solution for Increasing Financial Inclusion in Sub-Saharan African Countries: Evidence from Nigeria," Sustainability, MDPI, vol. 12(23), pages 1-24, December.
    7. Cariolle, Joël, 2021. "International connectivity and the digital divide in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 55(C).
    8. Sam Njinyah & Simplice A. Asongu & Sally Jones, 2022. "The role of mobile money adoption in moderating the influence of access to finance in firm performance," Working Papers of the African Governance and Development Institute. 22/075, African Governance and Development Institute..
    9. Leora Klapper & Dorothe Singer, 2018. "The role of demand-side data - measuring financial inclusion from the perspective of users of financial services," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The role of data in supporting financial inclusion policy, volume 47, Bank for International Settlements.
    10. Christian Lambert Nguena, 2019. "Working Paper 323- Mobile Financial and Banking Services Development in Africa," Working Paper Series 2449, African Development Bank.
    11. Kara, Alper & Zhou, Haoyong & Zhou, Yifan, 2021. "Achieving the United Nations' sustainable development goals through financial inclusion: A systematic literature review of access to finance across the globe," International Review of Financial Analysis, Elsevier, vol. 77(C).
    12. Christian Lambert Nguena & Roger Tsafack Nanfosso, 2013. "What Drives and Limits Financial Deepening Dynamics? Fresh Empirical-based Policy Lessons for African Sub-Regions," AAYE Policy Research Working Paper Series 13_003, Association of African Young Economists, revised Nov 2013.
    13. 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.
    14. Helmi Hamdi, 2011. "Can E-Payment Systems Revolutionize Finance of the Less Developed Countries? The Case of Mobile Payment Technology," International Journal of Economics and Financial Issues, Econjournals, vol. 1(2), pages 46-53, June.
    15. Roberto Alvarez & Ricardo López, 2013. "Financial development, exporting and firm heterogeneity in Chile," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(1), pages 183-207, March.
    16. Masoud Mohammed Albiman & Hamad Omar Bakar, 2022. "The Role of Financial Inclusion on Economic Growth in Sub Saharan African (SSA) Region," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 8(4), pages 363-384, October.
    17. Johann Maree & Rachel Piontak & Tonny Omwansa & Isaac Shinyekwa & Kamotho Njenga, 2013. "Developmental uses of mobile phones in Kenya and Uganda," Global Development Institute Working Paper Series ctg-2013-35, GDI, The University of Manchester.
    18. Pradhan, Rudra P. & Arvin, Mak B. & Nair, Mahendhiran S. & Hall, John H. & Bennett, Sara E., 2021. "Sustainable economic development in India: The dynamics between financial inclusion, ICT development, and economic growth," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    19. O’Toole Conor M., 2014. "Does Financial Liberalisation Improve Access to Investment Finance in Developing Countries?," Journal of Globalization and Development, De Gruyter, vol. 5(1), pages 1-34, June.
    20. Kaliyev Kalizhan Sagatbekovich & Mira Nurmakhanova, 2021. "Bank Regulation in the Economies in Transition," SAGE Open, , vol. 11(4), pages 21582440211, November.

    More about this item

    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:bla:ecaffa:v:38:y:2018:i:3:p:406-421. 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: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0265-0665 .

    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.