Mobile Money, Interoperability, and Financial Inclusion

95 Pages Posted: 18 Sep 2023

See all articles by Markus K. Brunnermeier

Markus K. Brunnermeier

Princeton University - Department of Economics

Nicola Limodio

Bocconi University; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Bocconi University - Baffi Carefin Centre; Centre for Economic Policy Research (CEPR)

Lorenzo Spadavecchia

Bocconi University

Date Written: September 2023

Abstract

This paper investigates the tradeoff between competition and financial inclusion resulting from the vertical integration between mobile network and money operators. Joining newly assembled data on mobile money fees through the WayBack machine, with sources on network coverage and financials, we examine the staggering across African operators and countries of platform interoperability – a policy that promotes transactions and competition across mobile money operators. Our results show that interoperability benefits users by lowering mobile money fees and their dispersion across operators. However, these positive effects are offset by a decrease in mobile towers and network coverage, especially in rural and poor districts, which, in turn, leads to a lower financial inclusion. We note that combining interoperability with subsidies for rural telecommunications delivers lower fees without hurting coverage.

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Suggested Citation

Brunnermeier, Markus Konrad and Limodio, Nicola and Spadavecchia, Lorenzo, Mobile Money, Interoperability, and Financial Inclusion (September 2023). NBER Working Paper No. w31696, Available at SSRN: https://ssrn.com/abstract=4574641

Markus Konrad Brunnermeier (Contact Author)

Princeton University - Department of Economics ( email )

Bendheim Center for Finance
Princeton, NJ
United States
609-258-4050 (Phone)
609-258-0771 (Fax)

HOME PAGE: http://www.princeton.edu/¡­markus

Nicola Limodio

Bocconi University ( email )

Via Roentgen 1
Milano, MI 20136
Italy

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

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Bocconi University - Baffi Carefin Centre ( email )

Via Roentgen 1
Milan
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Lorenzo Spadavecchia

Bocconi University ( email )

Via Sarfatti, 25
Milan, 20136
Italy

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