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Determinants of private sector credit in Uganda: the role of mobile money

Author

Listed:
  • Dorothy Nampewo

    (Bank of Uganda)

  • Grace Ainomugisha Tinyinondi

    (Bank of Uganda)

  • Duncan Roy Kawooya

    (Bank of Uganda)

  • George Wilson Ssonko

    (Bank of Uganda)

Abstract

Background Mobile money services have been associated with unprecedented access to financial services, notably to under-banked and unbanked populations. Thus, mobile money opens a channel through which to examine the supply of private sector credit in Uganda. This study investigates how mobile money services influence private sector credit growth. Methods We applied the vector error correction (VEC) model and Granger causality analysis to Ugandan data from March 2009 to February 2016, the period when mobile money services were introduced. Results The VEC model reveals that mobile money has a significant positive long-run association with private sector credit growth. Granger causality analysis reveals long-run unidirectional causality from mobile money to private sector credit. Conclusions Mobile money is critical for financial intermediation because it attracts resources from both the banked and the unbanked populations into the formal financial system, facilitating private sector credit growth.

Suggested Citation

  • Dorothy Nampewo & Grace Ainomugisha Tinyinondi & Duncan Roy Kawooya & George Wilson Ssonko, 2016. "Determinants of private sector credit in Uganda: the role of mobile money," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-16, December.
    • Handle: RePEc:spr:fininn:v:2:y:2016:i:1:d:10.1186_s40854-016-0033-x
    DOI: 10.1186/s40854-016-0033-x
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    References listed on IDEAS

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    Cited by:

    1. Apeti, Ablam Estel & Edoh, Eyah Denise, 2023. "Tax revenue and mobile money in developing countries," Journal of Development Economics, Elsevier, vol. 161(C).
    2. Ronald Baganzi & Antonio K. W. Lau, 2017. "Examining Trust and Risk in Mobile Money Acceptance in Uganda," Sustainability, MDPI, vol. 9(12), pages 1-22, December.
    3. Ochen, Ronald & Bulime, Enock Will Nsubuga, 2023. "Digital Financial Services regulations: Their evolution and impact on financial inclusion in East Africa," KBA Centre for Research on Financial Markets and Policy Working Paper Series 73, Kenya Bankers Association (KBA).
    4. Joseph Mawejje & Paul Lakuma, 2019. "Macroeconomic effects of Mobile money: evidence from Uganda," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-20, December.

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