How Has Mobile Phone Penetration Stimulated Financial Development in Africa?

Journal of African Business, 14(1), pp. 7-18 (2013).

27 Pages Posted: 10 Sep 2014 Last revised: 1 Apr 2015

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: September 8, 2012

Abstract

In the first macroeconomic empirical assessment of the relationship between mobile phones and finance, this paper examines the correlations between mobile phone penetration and financial development using two conflicting definitions of the financial system in the financial development literature. With the traditional IFS (2008) definition, mobile phone penetration has a negative correlation with traditional financial intermediary dynamics of depth, activity and size. However, when a previously missing informal-financial sector component is integrated into the definition, mobile phone penetration has a positive correlation with informal financial development. Three implications result: there is a growing role of informal finance; mobile phone penetration may not be positively assessed at a macroeconomic level by traditional financial development indicators and; it is a wake-up call for scholarly research on informal financial development indicators which will oriented monetary policy.

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

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

Suggested Citation

Asongu, Simplice, How Has Mobile Phone Penetration Stimulated Financial Development in Africa? (September 8, 2012). Journal of African Business, 14(1), pp. 7-18 (2013). . Available at SSRN: https://ssrn.com/abstract=2493265 or http://dx.doi.org/10.2139/ssrn.2493265

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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