How Has Mobile Banking Stimulated Financial Development in Africa?

African Governance and Development Institute WP/12/027

34 Pages Posted: 10 Sep 2014

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: May 8, 2012

Abstract

In the first empirical assessment of the incidence of mobile banking on financial intermediary development in Africa, we use two definitions of the financial system: the traditional IFS (2008) and Asongu (2011) measures of financial sector importance. When the conception of a financial system is based only on banks and other financial institution (IFS, 2008), mobile banking has a negative incidence on traditional financial intermediary dynamics of depth, activity and size. However, when a previously missing informal-financial sector component is integrated into the definition (Asongu, 2011), mobile-banking has a positive incidence on informal financial intermediary development. Three major implications result from the findings. (1) There is a growing role of informal finance in developing countries. (2) The incidence of the burgeoning phenomenon of mobile-banking cannot be effectively assessed at a macroeconomic level by traditional financial development indicators. (3) It is a wake-up call for scholarly research on informal financial intermediary development indicators which will oriented monetary policy; since a great chunk of the monetary base(M0) in less developed countries is now captured by mobile-banking.

Keywords: Banking; Mobile Phones; Shadow Economy; Financial Development; Africa

JEL Classification: E00; G20; L96; O17; O33

Suggested Citation

Asongu, Simplice, How Has Mobile Banking Stimulated Financial Development in Africa? (May 8, 2012). African Governance and Development Institute WP/12/027. Available at SSRN: https://ssrn.com/abstract=2493243 or http://dx.doi.org/10.2139/ssrn.2493243

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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