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

Dorothy Nampewo (), Grace Ainomugisha Tinyinondi (), Duncan Roy Kawooya () and George Wilson Ssonko ()
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Dorothy Nampewo: Bank of Uganda
Grace Ainomugisha Tinyinondi: Bank of Uganda
Duncan Roy Kawooya: Bank of Uganda
George Wilson Ssonko: Bank of Uganda

Financial Innovation, 2016, vol. 2, issue 1, 1-16

Abstract: 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.

Keywords: Mobile money; Private sector credit; Uganda (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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DOI: 10.1186/s40854-016-0033-x

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