Does Mobile Money Use Increase Firms'Investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania

37 Pages Posted: 15 Nov 2016

See all articles by Asif Islam

Asif Islam

World Bank - Development Economics Group (DEC)

Silvia Muzi

World Bank

Jorge Rodríguez-Meza

World Bank

Date Written: November 14, 2016

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.

Keywords: ICT Economics

Suggested Citation

Islam, Asif Mohammed and Muzi, Silvia and Rodríguez-Meza, Jorge, Does Mobile Money Use Increase Firms'Investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania (November 14, 2016). World Bank Policy Research Working Paper No. 7890, Available at SSRN: https://ssrn.com/abstract=2869556

Asif Mohammed Islam (Contact Author)

World Bank - Development Economics Group (DEC) ( email )

1818 H Street N.W.
Washington, DC 20433
United States

Silvia Muzi

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Jorge Rodríguez-Meza

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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