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Mobile money, inclusive finance and enterprise innovativeness: an analysis of East African nations

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  • Edward Lorenz
  • Sophie Pommet

Abstract

This study explores the relationship between firms’ adoption of mobile money services and their innovativeness in the East African countries of Kenya, Uganda and Tanzania. We argue that the use of mobile money by firms in these countries has had a positive indirect impact on their innovativeness by reducing the credit constraints they face. Using data available from the World Bank Enterprise Surveys, we adopt a sequential modelling approach, first estimating the impact of mobile money use on credit constraints and then estimating the impact of credit constraints on binary indicators of product, process and organisational innovation. Innovation is shown to depend on whether or not the firm is credit constrained, and the probability of being credit constrained is shown to depend on the choices made about the use of mobile money. We find that the indirect impact of mobile money on innovation performance is greater for small firms than for medium or large firms.

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  • Edward Lorenz & Sophie Pommet, 2021. "Mobile money, inclusive finance and enterprise innovativeness: an analysis of East African nations," Industry and Innovation, Taylor & Francis Journals, vol. 28(2), pages 136-159, February.
    • Handle: RePEc:taf:indinn:v:28:y:2021:i:2:p:136-159
    DOI: 10.1080/13662716.2020.1774867
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    Cited by:

    1. Cappa, Francesco & Collevecchio, Francesca & Oriani, Raffaele & Peruffo, Enzo, 2022. "Banks responding to the digital surge through Open Innovation: Stock market performance effects of M&As with fintech firms," Journal of Economics and Business, Elsevier, vol. 121(C).
    2. Sam Njinyah & Simplice A. Asongu & Sally Jones, 2022. "The role of mobile money adoption in moderating the influence of access to finance in firm performance," Working Papers of the African Governance and Development Institute. 22/075, African Governance and Development Institute..
    3. Yang, Yang & Lin, Zibo & Xu, Zhaoyi & Liu, Shuwen, 2024. "The impact of digital finance on regional economic resilience," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    4. Melain Modeste Senou & Denis Acclassato Houensou, 2024. "From expanding financial services to tackling poverty in West African Economic and Monetary Union: The accelerating role of mobile money," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(3), pages 1707-1737, April.
    5. Wenxiu (Vince) Nan & Minseok Park, 2022. "Improving the resilience of SMEs in times of crisis: The impact of mobile money amid Covid‐19 in Zambia," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(4), pages 697-714, May.
    6. Du, Yanan & Wang, Qingxi & Zhou, Jianping, 2023. "How does digital inclusive finance affect economic resilience: Evidence from 285 cities in China," International Review of Financial Analysis, Elsevier, vol. 88(C).

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