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How has Mobile Phone Penetration Stimulated Financial Development in Africa?

  • Asongu Simplice



In the first macroeconomic empirical assessment of the relationship between mobile phones and finance, this paper examines the correlations between mobile phone penetration and financial development using two conflicting definitions of the financial system in the financial development literature. With the traditional IFS (2008) definition, mobile phone penetration has a negative correlation with traditional financial intermediary dynamics of depth, activity and size. However, when a previously missing informal-financial sector component is integrated into the definition, mobile phone penetration has a positive correlation with informal financial development. Three implications result: there is a growing role of informal finance; mobile phone penetration may not be positively assessed at a macroeconomic level by traditional financial development indicators and; it is a wake-up call for scholarly research on informal financial development indicators which will oriented monetary policy.

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Paper provided by African Governance and Development Institute. in its series Working Papers with number 12/026.

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Length: 27
Date of creation: 10 Sep 2012
Date of revision:
Publication status: Published in The Journal of African Business
Handle: RePEc:agd:wpaper:12/026
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  1. Simplice A. Asongu, 2014. "Finance and Democracy in Africa," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 6(3), pages 92-116, October.
  2. Demombynes, Gabriel & Thegeya, Aaron, 2012. "Kenya's mobile revolution and the promise of mobile savings," Policy Research Working Paper Series 5988, The World Bank.
  3. Jenny Aker and Isaac M. Mbiti, 2010. "Mobile Phones and Economic Development in Africa," Working Papers 211, Center for Global Development.
  4. Ndikumana, Leonce, 2000. "Financial Determinants of Domestic Investment in Sub-Saharan Africa: Evidence from Panel Data," World Development, Elsevier, vol. 28(2), pages 381-400, February.
  5. Simplice A., Asongu, 2011. "Law and finance in Africa," MPRA Paper 34080, University Library of Munich, Germany.
  6. Mas, Ignacio & Radcliffe, Daniel, 2011. "Mobile Payments Go Viral: M-PESA in Kenya," Journal of Financial Transformation, Capco Institute, vol. 32, pages 169-182.
  7. Simplice A, Asongu, 2010. "Bank efficiency and openness in Africa: do income levels matter?," MPRA Paper 27011, University Library of Munich, Germany.
  8. Antonio Rodriguez Andres, 2006. "Software piracy and income inequality," Applied Economics Letters, Taylor & Francis Journals, vol. 13(2), pages 101-105.
  9. Simplice A., Asongu, 2011. "Law, finance, economic growth and welfare: why does legal origin matter?," MPRA Paper 33868, University Library of Munich, Germany.
  10. Simplice A., Asongu, 2011. "New financial intermediary development indicators for developing countries," MPRA Paper 30921, University Library of Munich, Germany.
  11. Isaac Mbiti & David N. Weil, 2011. "Mobile Banking: The Impact of M-Pesa in Kenya," NBER Working Papers 17129, National Bureau of Economic Research, Inc.
  12. Enowbi Batuo, Michael & Guidi, Francesco & Mlambo, Kupukile, 2010. "Financial Development and Income Inequality: Evidence from African Countries," MPRA Paper 25658, University Library of Munich, Germany.
  13. Asongu Simplice, 2011. "Why do French civil-law countries have higher levels of financial efficiency?," Working Papers 11/011, African Governance and Development Institute..
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