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Fighting competition from Mobile Network Operators in the banking sector: The case of Kenya

Author

Listed:
  • Emmanuelle Auriol

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Alexia Gonzalez Fanfalone

    (Organisation for Economic Cooperation and Development (OECD))

Abstract

This paper studies how Mobile Network Operator (MNO) impacts traditional banks' coverage decision in a model of vertical and horizontal differentiation with asymmetric transportation costs. The competitive pressure triggered by MNOs entry on traditional banking sector leads to prices decrease and broadens financial inclusion as the traditional banking sector expands its network in response to the entry of MNOs. The model's predictions are checked against data from Kenya, where mobile banking has been most successful. Results from the econometric model for the period 2000-2011, suggest that, roughly, for each 7 new mobile agents in a sub-locality, one new bank branch opened.

Suggested Citation

  • Emmanuelle Auriol & Alexia Gonzalez Fanfalone, 2024. "Fighting competition from Mobile Network Operators in the banking sector: The case of Kenya," Working Papers hal-04954475, HAL.
    • Handle: RePEc:hal:wpaper:hal-04954475
    Note: View the original document on HAL open archive server: https://hal.science/hal-04954475v1
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