The Monetary Economics of e-Money and Policy Implications: Evidence from Uganda

Nicholas Okot, Isaac M. B. Shinyekwa, Enock Bulime () and Justine Luwedde

Working Papers from African Economic Research Consortium

Abstract: The fourth-generation technological innovations coupled with Fintech has evolved into global transition to e-money. In Uganda the uptake and usage of e-money services have exponentially grown since the introduction of mobile money services in 2009. This study examines the theoretical foundation of e-money economics and employs time-series econometric approaches on Uganda data for the period 2009Q1-2022Q4 to assess their implication on the stability of the money demand function and transmission of monetary policy. The test for stability following the estimation of the money demand function with autoregressive distributed lag (ARDL) and transmission mechanisms in the vector autoregressive (VAR) model indicate that, e-money distorts the stability of the money demand function in the short-run and is procyclical with monetary policy shock (policy interest rates adjustments). These attributes of e-money are likely to adversely affect the effectiveness of monetary policy transmissions.

Date: 2025
New Economics Papers: this item is included in nep-mon and nep-pay
Note: African Economic Research Consortium
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