EconPapers    
Economics at your fingertips  
 

Informal Sector and Mobile Financial Services in Developing Countries: Does Financial Innovation Matter?

Luc Jacolin, Massil Keneck and Alphonse Noah

Working papers from Banque de France

Abstract: This paper investigates the impact of mobile financial services - MFS (mobile money, and mobile credit and savings) on the informal sector. Using both parametric and non-parametric methods on panel data from 101 emerging and developing countries over the period 2000-15, we find that MFS negatively affect the size of the informal sector. According to estimates derived from propensity score matching, MFS adoption decreases the informal sector size in a range of 2.4 – 4.3 percentage points of GDP. These formalization effects may stem from different possible transmission channels: improvement in credit access, increase in the productivity/profitability of informal firms attenuating subsistence constraints typical of entrepreneurship in the informal sector, as well as possible induced growth of firms already in the formal sector. The robustness of these results is supported by the use of an alternative estimation approach (instrumental variables). These findings lay the groundwork for the scarce literature on the macroeconomic impact of mobile financial services, a major dimension of the growing drive towards economic digitalization transiting through industry-level MW.

Keywords: Mobile financial services; Mobile money; Financial innovation; Digitalization; Informal sector; Developing countries. (search for similar items in EconPapers)
JEL-codes: C26 E26 O33 G29 L96 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-ent, nep-fdg, nep-iue, nep-mac, nep-mfd, nep-pay and nep-tid
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... /documents/wp721.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:721

Access Statistics for this paper

More papers in Working papers from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().

 
Page updated 2019-10-14
Handle: RePEc:bfr:banfra:721