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Innovations in emerging markets: the case of mobile money

Adeline Pelletier, Susanna Khavul and Saul Estrin

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Mobile money is a financial innovation that provides transfers, payments, and other financial services at a low or zero cost to individuals in developing countries where banking and capital markets are deficient and financial inclusion is low. We use transaction costs and institutional theories to explain the growth and impact of mobile money. Having developed a new archival dataset that tracks mobile money deployment across 90 emerging economies during 16 years between 2000 and 2015, we address the question of relative economic impact of the banking and telecoms sectors in the provision of mobile money. We show that telecom groups and not banks are more likely to launch mobile money in countries where legal rights are weaker and credit information less prevalent. However, it is when mobile money is offered via a banking channel that the spillover effects on the economy are greater. Findings have significant implications for policy and strategy.

JEL-codes: G21 M13 O33 (search for similar items in EconPapers)
Date: 2019-09-09
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-fle, nep-ino, nep-mfd, nep-mon and nep-pay
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Published in Industrial and Corporate Change, 9, September, 2019. ISSN: 0960-6491

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