IDEAS home Printed from https://ideas.repec.org/a/spr/fininn/v2y2016i1d10.1186_s40854-016-0033-x.html
   My bibliography  Save this article

Determinants of private sector credit in Uganda: the role of mobile money

Author

Listed:
  • Dorothy Nampewo

    (Bank of Uganda)

  • Grace Ainomugisha Tinyinondi

    (Bank of Uganda)

  • Duncan Roy Kawooya

    (Bank of Uganda)

  • George Wilson Ssonko

    (Bank of Uganda)

Abstract

Background Mobile money services have been associated with unprecedented access to financial services, notably to under-banked and unbanked populations. Thus, mobile money opens a channel through which to examine the supply of private sector credit in Uganda. This study investigates how mobile money services influence private sector credit growth. Methods We applied the vector error correction (VEC) model and Granger causality analysis to Ugandan data from March 2009 to February 2016, the period when mobile money services were introduced. Results The VEC model reveals that mobile money has a significant positive long-run association with private sector credit growth. Granger causality analysis reveals long-run unidirectional causality from mobile money to private sector credit. Conclusions Mobile money is critical for financial intermediation because it attracts resources from both the banked and the unbanked populations into the formal financial system, facilitating private sector credit growth.

Suggested Citation

  • Dorothy Nampewo & Grace Ainomugisha Tinyinondi & Duncan Roy Kawooya & George Wilson Ssonko, 2016. "Determinants of private sector credit in Uganda: the role of mobile money," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-16, December.
    • Handle: RePEc:spr:fininn:v:2:y:2016:i:1:d:10.1186_s40854-016-0033-x
    DOI: 10.1186/s40854-016-0033-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s40854-016-0033-x
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s40854-016-0033-x?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. Cottarelli, Carlo & Dell'Ariccia, Giovanni & Vladkova-Hollar, Ivanna, 2005. "Early birds, late risers, and sleeping beauties: Bank credit growth to the private sector in Central and Eastern Europe and in the Balkans," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 83-104, January.
    2. Muellbauer, John & Aron, Janine & Sebudde, Rachel, 2015. "Inflation forecasting models for Uganda: is mobile money relevant?," CEPR Discussion Papers 10739, C.E.P.R. Discussion Papers.
    3. Shijaku, Gerti & Kalluci, Irini, 2013. "Determinants of bank credit to the private sector: The case of Albania," MPRA Paper 79092, University Library of Munich, Germany.
    4. Lwanga, Musa & Adong, Annet, 2016. "A pathway to financial inclusion: mobile money and individual Savings in Uganda," Research Series 234553, Economic Policy Research Centre (EPRC).
    5. Shengzu Wang & Chris Marsh & Rishi Goyal & Narayanan Raman & Swarnali A Hannan, 2011. "Financial Deepening and International Monetary Stability," IMF Staff Discussion Notes 11/16, International Monetary Fund.
    6. Lwanga Mayanja, Musa & Adong, Annet, 2016. "A pathway to financial inclusion: Mobile money and individual savings in Uganda," Research Reports 253557, Economic Policy Research Centre (EPRC).
    7. William Jack & Adam Ray & Tavneet Suri, 2013. "Transaction Networks: Evidence from Mobile Money in Kenya," American Economic Review, American Economic Association, vol. 103(3), pages 356-361, May.
    8. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    9. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    10. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934, Elsevier.
    11. Gozgor, Giray, 2014. "Determinants of domestic credit levels in emerging markets: The role of external factors," Emerging Markets Review, Elsevier, vol. 18(C), pages 1-18.
    12. Mark Carey, 1998. "Credit Risk in Private Debt Portfolios," Journal of Finance, American Finance Association, vol. 53(4), pages 1363-1387, August.
    13. Greetje Everaert & Ms. Natasha X Che & Ms. Nan Geng & Bertrand Gruss & Gregorio Impavido & Miss Yinqiu Lu & Christian Saborowski & Mr. Jerome Vandenbussche & Mr. Li Zeng, 2015. "Does Supply or Demand Drive the Credit Cycle? Evidence from Central, Eastern, and Southeastern Europe," IMF Working Papers 2015/015, International Monetary Fund.
    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. Ochen, Ronald & Bulime, Enock Will Nsubuga, 2023. "Digital Financial Services regulations: Their evolution and impact on financial inclusion in East Africa," KBA Centre for Research on Financial Markets and Policy Working Paper Series 73, Kenya Bankers Association (KBA).
    2. Apeti, Ablam Estel & Edoh, Eyah Denise, 2023. "Tax revenue and mobile money in developing countries," Journal of Development Economics, Elsevier, vol. 161(C).
    3. Joseph Mawejje & Paul Lakuma, 2019. "Macroeconomic effects of Mobile money: evidence from Uganda," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-20, December.
    4. Ronald Baganzi & Antonio K. W. Lau, 2017. "Examining Trust and Risk in Mobile Money Acceptance in Uganda," Sustainability, MDPI, vol. 9(12), pages 1-22, December.

    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. Gries, Thomas & Kraft, Manfred & Meierrieks, Daniel, 2009. "Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 37(12), pages 1849-1860, December.
    2. Bishnu Prasad Gautam Ph.D., 2014. "Financial Development and Economic Growth in Nepal," NRB Working Paper 25/2014, Nepal Rastra Bank, Research Department.
    3. Lepers, Etienne & Sánchez Serrano, Antonio, 2020. "Decomposing financial (in)stability in emerging economies," Research in International Business and Finance, Elsevier, vol. 51(C).
    4. Serhan Cevik & Mohammad H. Rahmati, 2020. "Searching for the finance–growth nexus in Libya," Empirical Economics, Springer, vol. 58(2), pages 567-581, February.
    5. Md Samsul Alam & Md Shahidul Islam & Syed Jawad Hussain Shahzad & Shazia Bilal, 2021. "Rapid rise of life expectancy in Bangladesh: Does financial development matter?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 4918-4931, October.
    6. Thorsten Beck, 2009. "The Econometrics of Finance and Growth," Palgrave Macmillan Books, in: Terence C. Mills & Kerry Patterson (ed.), Palgrave Handbook of Econometrics, chapter 25, pages 1180-1209, Palgrave Macmillan.
    7. Bishnu Prasad Gautam, Ph.D., 2015. "Role of Financial Development in Economic Growth of Nepal: An Empirical Analysis," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 27(1), pages 1-16, April.
    8. Thomas Gries & Manfred Kraft & Daniel Meierrieks, 2011. "Financial deepening, trade openness and economic growth in Latin America and the Caribbean," Applied Economics, Taylor & Francis Journals, vol. 43(30), pages 4729-4739.
    9. Maswana, Jean-Claude, 2006. "An empirical investigation around the finance-growth puzzle in China with a particular focus on causality and efficiency considerations," MPRA Paper 3946, University Library of Munich, Germany, revised Apr 2006.
    10. Park,Haelim & Ruiz Ortega,Claudia & Tressel,Thierry, 2015. "Determinants of long-term versus short-term bank credit in EU countries," Policy Research Working Paper Series 7436, The World Bank.
    11. Abdul Rafay & Saqib Farid, 2017. "Dynamic Relationship between Islamic Banking System and Real Economic Activity: Evidence from Pakistan العلاقة الديناميكية بين النظام المصرفي الإسلامي والنشاط الاقتصادي الحقيقي: التجربة الباكستانية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 30(2), pages 97-116, July.
    12. Evans, Olaniyi, 2013. "Testing Finance-Led, Export-Led and Import-Led Growth Hypotheses on Four Sub-Saharan African Economies," MPRA Paper 52460, University Library of Munich, Germany.
    13. Thi Hong Hanh Pham, 2015. "Determinants of Bank Lending," Working Papers hal-01158241, HAL.
    14. repec:abd:kauiea:v:30:y:2017:i:2:p:97-116 is not listed on IDEAS
    15. Bilge Kagan Ozdemir, 2009. "Banking Sector Stability During The Process Of Euro Adoption," Anadolu University Journal of Social Sciences, Anadolu University, vol. 9(1), pages 123-1236, June.
    16. Rodolfo Cermeño & María José Roa García & Claudio González-Vega, 2016. "Financial Development and the Volatility of Growth: Time Series Evidence for Mexico and United States," Monetaria, Centro de Estudios Monetarios Latinoamericanos, CEMLA, vol. 0(2), pages 195-232, july-dece.
    17. Czujack, Corinna & Flôres Junior, Renato Galvão & Ginsburgh, Victor, 1995. "On long-run price comovements between paintings and prints," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 269, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    18. Zamani, Mehrzad, 2007. "Energy consumption and economic activities in Iran," Energy Economics, Elsevier, vol. 29(6), pages 1135-1140, November.
    19. Muhammad Shafiullah & Ravinthirakumaran Navaratnam, 2016. "Do Bangladesh and Sri Lanka Enjoy Export-Led Growth? A Comparison of Two Small South Asian Economies," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 114-132, March.
    20. Wesam Salah Alaloul & Muhammad Ali Musarat & Muhammad Babar Ali Rabbani & Qaiser Iqbal & Ahsen Maqsoom & Waqas Farooq, 2021. "Construction Sector Contribution to Economic Stability: Malaysian GDP Distribution," Sustainability, MDPI, vol. 13(9), pages 1-26, April.
    21. Xiaojie Xu, 2017. "The rolling causal structure between the Chinese stock index and futures," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 31(4), pages 491-509, November.

    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:spr:fininn:v:2:y:2016:i:1:d:10.1186_s40854-016-0033-x. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.