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Mobile Money, Interoperability, and Financial Inclusion

Author

Listed:
  • Markus K. Brunnermeier
  • Nicola Limodio
  • Lorenzo Spadavecchia

Abstract

This paper investigates the tradeoff between competition and financial inclusion resulting from the vertical integration between mobile network and money operators. Joining newly assembled data on mobile money fees through the WayBack machine, with sources on network coverage and financials, we examine the staggering across African operators and countries of platform interoperability – a policy that promotes transactions and competition across mobile money operators. Our results show that interoperability benefits users by lowering mobile money fees and their dispersion across operators. However, these positive effects are offset by a decrease in mobile towers and network coverage, especially in rural and poor districts, which, in turn, leads to a lower financial inclusion. We note that combining interoperability with subsidies for rural telecommunications delivers lower fees without hurting coverage.

Suggested Citation

  • Markus K. Brunnermeier & Nicola Limodio & Lorenzo Spadavecchia, 2023. "Mobile Money, Interoperability, and Financial Inclusion," NBER Working Papers 31696, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31696
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    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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