Mobile Phones for Financial Inclusion: What Explains the Diffusion of Mobile Money Innovations?

41 Pages Posted: 1 Oct 2019

See all articles by Addisu Lashitew

Addisu Lashitew

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Rob van Tulder

Rotterdam School of Management

Yann Liasse

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Date Written: September 27, 2019

Abstract

Mobile money innovations are expanding rapidly in developing countries, where they appear to be on track to extend financial services to billions of unbanked populations. However, adoption rates differ significantly across countries, and the success of innovations is radically different within countries. To understand the factors that affect the development and diffusion of mobile money services, this study uses a mixed research method that combines cross-country data of adoption rates and an in-depth case study of a successful mobile money innovation. Quantitative analysis of adoption rates across countries indicates the varying role of institutional and economic factors on the adoption and usage of mobile money innovations. We undertake an in-depth study of M-Pesa in Kenya, one of the world’s most known mobile money innovations, to gain nuanced understanding of the development and diffusion of the innovation. Analysis using the functional innovation system approach reveals the key role of the lead firm in guiding the innovation process, and the importance of a supportive regulatory environment that sought to advance financial inclusion. The results further reveal how the power and interest dynamics of key actors in the innovation system can shape the emergence of appropriate technologies that aim to address social issues.

Keywords: Mobile Money, Innovation Systems, Appropriate Technology, Technology Diffusion, Financial Inclusion, Inclusive Innovation

JEL Classification: O12, O31, O35, G23

Suggested Citation

Lashitew, Addisu and van Tulder, Rob and Liasse, Yann, Mobile Phones for Financial Inclusion: What Explains the Diffusion of Mobile Money Innovations? (September 27, 2019). Research Policy, Vol. 48, No. 5, June 2019. Available at SSRN: https://ssrn.com/abstract=3460813 or http://dx.doi.org/10.2139/ssrn.3460813

Addisu Lashitew (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Rob Van Tulder

Rotterdam School of Management ( email )

Yann Liasse

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

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