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Does mobile money use increase firms'investment ? evidence from enterprise Surveys in Kenya, Uganda, and Tanzania

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  • Islam,Asif Mohammed
  • Muzi,Silvia
  • Rodriguez Meza,Jorge Luis

Abstract

Private investment can be an important engine of economic growth in East African countries, which, despite recent growth rates, are still plagued with adverse economic conditions. Against this backdrop, there has been substantial penetration of mobile money, moving beyond simple person-to-person exchanges toward adoption by private firms. This study explores whether there is a relationship between firm adoption of mobile money and firm investment. Using firm-level data that are nationally representative of the private sector in three East African countries -- Kenya, Tanzania, and Uganda -- a positive relationship is found between mobile money use and the probability of a firm?s purchase of fixed assets. This relationship is attributed to reduced transaction costs, increased liquidity, and increased credit worthiness associated with the use of mobile phone financial services.

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  • Islam,Asif Mohammed & Muzi,Silvia & Rodriguez Meza,Jorge Luis, 2016. "Does mobile money use increase firms'investment ? evidence from enterprise Surveys in Kenya, Uganda, and Tanzania," Policy Research Working Paper Series 7890, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7890
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    1. Can mobile money increase investment by businesses?
      by Asif Islam in Let's Talk Development on 2016-12-01 21:45:00

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    2. Asif M. Islam & Silvia Muzi, 2022. "Does mobile money enable women-owned businesses to invest? Firm-level evidence from Sub-Saharan Africa," Small Business Economics, Springer, vol. 59(3), pages 1245-1271, October.
    3. Islam,Asif Mohammed & Muzi,Silvia, 2020. "Mobile Money and Investment by Women Businesses in Sub-Saharan Africa," Policy Research Working Paper Series 9338, The World Bank.
    4. Kabengele, Christian & Hahn, Rüdiger, 2021. "Institutional and firm-level factors for mobile money adoption in emerging markets–A configurational analysis," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    5. Apeti, Ablam Estel & Edoh, Eyah Denise, 2023. "Tax revenue and mobile money in developing countries," Journal of Development Economics, Elsevier, vol. 161(C).
    6. Gregory Mvogo & Christèle Gladisse Awounang Djouaka, 2022. "Effet du mobile money sur la résilience des ménages exerçant des activités génératrices de revenus au Cameroun," African Development Review, African Development Bank, vol. 34(4), pages 459-471, December.
    7. Sam Njinyah & Simplice A. Asongu & Sally Jones, 2022. "The role of mobile money adoption in moderating the influence of access to finance in firm performance," Working Papers of the African Governance and Development Institute. 22/075, African Governance and Development Institute..
    8. Luc Jacolin & Massil Keneck & Alphonse Noah, 2019. "Informal Sector and Mobile Financial Services in Developing Countries: Does Financial Innovation Matter?," Working papers 721, Banque de France.
    9. Marina Dodlova & Krisztina Kis-Katos & Anna Kochanova & Olivia Wirth, 2023. "Mobile technologies and firm formalization: Evidence from Uganda," WIDER Working Paper Series wp-2023-99, World Institute for Development Economic Research (UNU-WIDER).
    10. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Research Africa Network Working Papers 21/084, Research Africa Network (RAN).
    11. Owusu-Agyei, Samuel & Okafor, Godwin & Chijoke-Mgbame, Aruoriwo Marian & Ohalehi, Paschal & Hasan, Fakhrul, 2020. "Internet adoption and financial development in sub-Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    12. Komlan Gbongli & Yongan Xu & Komi Mawugbe Amedjonekou, 2019. "Extended Technology Acceptance Model to Predict Mobile-Based Money Acceptance and Sustainability: A Multi-Analytical Structural Equation Modeling and Neural Network Approach," Sustainability, MDPI, vol. 11(13), pages 1-33, July.
    13. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Working Papers 21/084, European Xtramile Centre of African Studies (EXCAS).
    14. Chiara, De Gasperin & Valentina, Rotondi & Luca, Stanca, 2019. "Mobile Money and the Labor Market: Evidence from Developing Countries," Working Papers 403, University of Milano-Bicocca, Department of Economics, revised Mar 2019.

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