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Is fintech good for bank performance? The case of mobile money in the East African Community


  • Serge Ky

    (LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

  • Clovis Rugemintwari

    (LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

  • Alain Sauviat

    () (LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)


Mobile money, a technology-driven innovation in financial services, has profoundly penetrated the financial landscape in Sub-Saharan Africa, including banks. Yet, besides anecdotal evidence, little is known about whether mobile money adoption enhances or worsens bank performance. Combining hand-collected data with balance sheet data from Bankscope for a panel of 170 financial institutions over the period 2009-2015, we find a strong positive and significant relationship between the time elapsed since banks' adoption of mobile money and their performance considering an array of proxies of bank profitability, efficiency and stability. In further investigations, we show how bank specialization and size alter such an association. Our results are robust to using instrumental variables, controlling for bank and macro level confounding factors, bank fixed effects and considering alternative measures of bank performance and mobile money adoption. Furthermore, we show that enhanced income diversification and broadened access to deposits are possible channels through which banks involved in mobile money improve their performance. Overall, our findings highlight the bright side of cooperation between banks and mobile network operators in the provision of mobile money.

Suggested Citation

  • Serge Ky & Clovis Rugemintwari & Alain Sauviat, 2019. "Is fintech good for bank performance? The case of mobile money in the East African Community," Working Papers hal-02155077, HAL.
  • Handle: RePEc:hal:wpaper:hal-02155077
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    References listed on IDEAS

    1. Laetitia Lepetit & Clovis Rugemintwari & Frank Strobel, 2015. "Monetary, Financial and Fiscal Stability in the East African Community: Ready for a Monetary Union?," The World Economy, Wiley Blackwell, vol. 38(8), pages 1179-1204, August.
    2. Beccalli, Elena, 2007. "Does IT investment improve bank performance? Evidence from Europe," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2205-2230, July.
    3. Amadou N Sy & Rodolfo Maino & Alexander Massara & Hector Perez-Saiz & Preya Sharma, 2019. "FinTech in Sub-Saharan African Countries; A Game Changer?," IMF Departmental Papers / Policy Papers 19/04, International Monetary Fund.
    4. Demirgüç-Kunt, Asli & Huizinga, Harry, 2010. "Bank activity and funding strategies: The impact on risk and returns," Journal of Financial Economics, Elsevier, vol. 98(3), pages 626-650, December.
    5. Köster, Hannes & Pelster, Matthias, 2017. "Financial penalties and bank performance," Journal of Banking & Finance, Elsevier, vol. 79(C), pages 57-73.
    6. Lashitew, Addisu A. & van Tulder, Rob & Liasse, Yann, 2019. "Mobile phones for financial inclusion: What explains the diffusion of mobile money innovations?," Research Policy, Elsevier, vol. 48(5), pages 1201-1215.
    7. Beck, Thorsten & Chen, Tao & Lin, Chen & Song, Frank M., 2016. "Financial innovation: The bright and the dark sides," Journal of Banking & Finance, Elsevier, vol. 72(C), pages 28-51.
    8. W. Scott Frame & Larry Wall & Lawrence J. White, 2018. "Technological Change and Financial Innovation in Banking: Some Implications for FinTech," Working Papers 18-28, New York University, Leonard N. Stern School of Business, Department of Economics.
    9. Prashant Bharadwaj & William Jack & Tavneet Suri, 2019. "Fintech and Household Resilience to Shocks: Evidence from Digital Loans in Kenya," NBER Working Papers 25604, National Bureau of Economic Research, Inc.
    10. Sarah Sanya & Matthew Gaertner, 2012. "Assessing Bank Competition within the East African Community," IMF Working Papers 12/32, International Monetary Fund.
    11. Drasch, Benedict J. & Schweizer, André & Urbach, Nils, 2018. "Integrating the ‘Troublemakers’: A taxonomy for cooperation between banks and fintechs," Journal of Economics and Business, Elsevier, vol. 100(C), pages 26-42.
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    Fintech; Mobile money; Innovation; Bank performance; East African Community;

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