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Fighting competition from Mobile Network Operators in the banking sector: The case of Kenya

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  • Auriol, Emmanuelle
  • Gonzalez Fanfalone, Alexia

Abstract

This paper studies how Mobile Network Operator (MNO) impacts traditional banks’ coverage decision in a model of vertical and horizontal differentiation with asymmetric transportation costs. The competitive pressure triggered by MNOs entry on traditional banking sector leads to prices decrease and broadens financial inclusion as the traditional banking sector expands its network in response to the entry of MNOs. The model’s predictions are checked against data from Kenya, where mobile banking has been most successful. Results from the econometric model for the period 2000-2011, suggest that, roughly, for each 7 new mobile agents in a sub-locality, one new bank branch opened.

Suggested Citation

  • Auriol, Emmanuelle & Gonzalez Fanfalone, Alexia, 2024. "Fighting competition from Mobile Network Operators in the banking sector: The case of Kenya," TSE Working Papers 1573, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:129721
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    Keywords

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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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