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Does mobile money use increase firms’ investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania

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  • Asif Islam

    (World Bank)

  • Silvia Muzi

    (World Bank)

  • Jorge Luis Rodriguez Meza

    (World Bank)

Abstract

Private investment can be an important engine of economic growth in East African countries that are plagued with adverse economic conditions, despite recent growth rates. Against this backdrop, there has been substantial penetration of mobile money, moving beyond simple person-to-person exchanges towards 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 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. The finding is largely driven by small- and medium-sized enterprises (SMEs).

Suggested Citation

  • Asif Islam & Silvia Muzi & Jorge Luis Rodriguez Meza, 2018. "Does mobile money use increase firms’ investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania," Small Business Economics, Springer, vol. 51(3), pages 687-708, October.
    • Handle: RePEc:kap:sbusec:v:51:y:2018:i:3:d:10.1007_s11187-017-9951-x
    DOI: 10.1007/s11187-017-9951-x
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Can mobile money increase investment by businesses?
      by Asif Islam in Let's Talk Development on 2016-12-01 21:45:00

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    2. Luc Jacolin & Massil Keneck & Alphonse Noah, 2019. "Informal Sector and Mobile Financial Services in Developing Countries: Does Financial Innovation Matter?," Working papers 721, Banque de France.
    3. Owusu-Agyei, Samuel & Okafor, Godwin & Chijoke-Mgbame, Aruoriwo Marian & Ohalehi, Paschal & Hasan, Fakhrul, 2020. "Internet adoption and financial development in sub-Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    4. Islam,Asif Mohammed & Muzi,Silvia, 2020. "Mobile Money and Investment by Women Businesses in Sub-Saharan Africa," Policy Research Working Paper Series 9338, The World Bank.
    5. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Working Papers of the African Governance and Development Institute. 21/084, African Governance and Development Institute..
    6. Komlan Gbongli & Yongan Xu & Komi Mawugbe Amedjonekou, 2019. "Extended Technology Acceptance Model to Predict Mobile-Based Money Acceptance and Sustainability: A Multi-Analytical Structural Equation Modeling and Neural Network Approach," Sustainability, MDPI, vol. 11(13), pages 1-33, July.
    7. Asif M. Islam & Silvia Muzi, 2022. "Does mobile money enable women-owned businesses to invest? Firm-level evidence from Sub-Saharan Africa," Small Business Economics, Springer, vol. 59(3), pages 1245-1271, October.
    8. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Working Papers 21/084, European Xtramile Centre of African Studies (EXCAS).
    9. Kabengele, Christian & Hahn, Rüdiger, 2021. "Institutional and firm-level factors for mobile money adoption in emerging markets–A configurational analysis," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    10. Ackah, Charles & Hanley, Aoife & Hecker, Lars & Kodom, Michael, 2024. "Urbanized and savvy: Which African firms are making the most of mobile money?," KCG Working Papers 35, Kiel Centre for Globalization (KCG).
    11. Marina Dodlova & Krisztina Kis-Katos & Anna Kochanova & Olivia Wirth, 2023. "Mobile technologies and firm formalization: Evidence from Uganda," WIDER Working Paper Series wp-2023-99, World Institute for Development Economic Research (UNU-WIDER).
    12. Apeti, Ablam Estel & Edoh, Eyah Denise, 2023. "Tax revenue and mobile money in developing countries," Journal of Development Economics, Elsevier, vol. 161(C).
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    15. Chiara, De Gasperin & Valentina, Rotondi & Luca, Stanca, 2019. "Mobile Money and the Labor Market: Evidence from Developing Countries," Working Papers 403, University of Milano-Bicocca, Department of Economics, revised Mar 2019.

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