M‐Pesa and the ‘Market‐Led’ Approach to Financial Inclusion

16 Pages Posted: 19 Oct 2018

See all articles by Scott Burns

Scott Burns

Ursinus College; Southeastern Louisiana University; American Institute for Economic Research

Date Written: October 2018


Inclusive financial systems play a critical role in fostering economic growth and development. However, the question of what is the best means of achieving this has long been a puzzle. In this article, I use the mobile money revolution in Sub‐Saharan Africa to show that the greatest examples of financial development have come from nations embracing a market‐led approach that removes repressive regulations and gives entrepreneurs the freedom to discover innovative ways to access the unbanked. Comparing the successes and failures of mobile money across the continent over the past decade, I argue that the best predictor of whether a country will reap the benefits of these transformative innovations is whether its government embraces a laissez‐faire, or ‘enabling’, regulatory approach that encourages entrepreneurship and experimentation.

Keywords: financial deepening, financial development, financial inclusion, fintech, M‐Pesa, mobile banking, mobile money

JEL Classification: E40, E49, F40, F62, G20, K29

Suggested Citation

Burns, Scott, M‐Pesa and the ‘Market‐Led’ Approach to Financial Inclusion (October 2018). Economic Affairs, Vol. 38, Issue 3, pp. 406-421, 2018, Available at SSRN: https://ssrn.com/abstract=3269438 or http://dx.doi.org/10.1111/ecaf.12321

Scott Burns (Contact Author)

Ursinus College ( email )

Collegeville, PA 19426-2562
United States
2259371098 (Phone)
2259371098 (Fax)

HOME PAGE: http://www.scottburnsecon.com

Southeastern Louisiana University ( email )

Hammond, LA 70402
United States

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

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