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The role of mobile characteristics on mobile money innovations

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Abstract

This study focuses on linkages between bank accounts and supply-side mobile money drivers for mobile money innovations. It seeks to understand how bank accounts can be complemented with mobile subscription and mobile connectivity dynamics (i.e., mobile connectivity coverage and mobile connectivity performance) for mobile money innovations. The empirical evidence is based on quadratic Tobit regressions. First, there are positive net relationships from the roles of mobile subscriptions and mobile connectivity coverage in modulating bank accounts for mobile money innovations. Second, mobile connectivity performance does not significantly modulate bank accounts for mobile money innovations. Third, given the negative marginal relationships associated with the positive net relationships, thresholds for complementary policies in mobile money supply factors that are worthwhile for bank accounts to stimulate mobile money innovations are provided. The thresholds are: (1) mobile subscription rates of 87.50%, 80.50%, and 98.50% of the adult population for respectively, mobile money accounts, the mobile used to send money, and the mobile used to receive money, and (2) mobile connectivity coverages of 64.00%, 69.33%, and 78.00% for respectively, mobile money accounts, the mobile used to send money, and the mobile used to receive money.

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Acknowledgements

The authors are thankful to Addisu A. Lashitew, Robvan Tulder and Yann Liasse, for sharing their dataset. The author is indebted to the editor and reviewers for constructive comments.

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This is an unfunded paper.

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Authors and Affiliations

  1. Department of Economics, University of South Africa, P. O. Box 392, Pretoria, UNISA 0003, South Africa

    Simplice Asongu & Nicholas Odhiambo

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  1. Simplice Asongu
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Correspondence to Simplice Asongu.

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Appendix 1: Definitions and sources of variables

Appendix 1: Definitions and sources of variables

Variables

Descriptions

Sources

Dependent variables

Mobile accounts

Percentage of adults who have personally used mobile phone to pay bills, send or receive money in the past 12 months using a GSMA recognized mobile money service

Financial Inclusion Indices (Findex) database

Sending money

Percentage of adults who used a mobile phone to send money in the past 12 months

 

Receiving money

Percentage of adults who used a mobile phone to receive money in the past 12 months

 

Demand factors

Account at formal financial institution

Percentage of adults who have an account at a formal financial institution

Global Financial Structure Database (GFSD)

ATM access

Number of ATMs per 100,000 people

 

Banking sector concentration

The percentage share of the three largest commercial banks in total banking assets

 

Supply factors

Mobile phone penetration- Gross and unique subscription rates

Gross mobile subscription rates refer to the percentage of adults in a country with subscriptions to mobile phones based on data from WDI. We used additional data from GSMA (2014) to calculate unique mobile subscription rates by correcting for double SIM-card ownership, which differs between rural and urban areas. This correction is based on survey evidence that urban and rural users own 2.03 and 1.18 active SIM-cards respectively

World Development Indicators (WDI), GSMA

Mobile connectivity quality

Measures the average speed of uploading and downloading data through mobile network in 2014 and 2015

GSMA

Mobile connectivity coverage

Measures the weighted average of share of populations covered by 2 G, 3 G and 4 G mobile data networks (normalized to range between 0 and 100)

GSMA

Telecom regulation

Measures the regulatory quality of the telecom sector in terms of four major criteria: transparency, independence, resource availability, and enforcement capability of the regulator. The index is based on dozens of indicators taken from the International Telecommunication Union’s regulatory database

Waverman and Koutroumpis (2011)

Macro-level factors

Rule of Law

A measure of the extent to which agents have confidence in and abide by the rules of society

WDI

GDP per capita

GDP per capita in purchasing power parity

WDI

GDP growth

The rate of total GDP growth

WDI

Urbanization rate

Percentage of population living in urban areas

WDI

  1. Mobile Accounts is based on the second wave of the survey (2014) and Sending Money and Receiving Money are based on the first wave (2011). The variables telecom regulation is based on data for 2011. The two variables measuring mobile connectivity are based on average values for the years 2014 and 2015. For the remaining variables, averages are taken over the years 2010–2014 to smooth out potential year-to-year variations.

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Asongu, S., Odhiambo, N. The role of mobile characteristics on mobile money innovations. Qual Quant 56, 4693–4710 (2022). https://doi.org/10.1007/s11135-022-01332-w

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