Is Fintech Good for Bank Performance? The Case of Mobile Money in the East African Community

Serge Stéphane Ky, Clovis Rugemintwari () and Alain Sauviat
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Clovis Rugemintwari: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges, UNILIM - Université de Limoges, GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Alain Sauviat: UNILIM - Université de Limoges, LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges

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Abstract: Mobile money, a technology‐driven innovation in financial services, has profoundly penetrated the financial landscape in Sub‐Saharan Africa, including banks. Yet, besides anecdotal evidence, little is known about whether mobile money adoption enhances or worsens bank performance. Combining hand‐collected data with balance sheet data from the Bureau Van Djik (BvD) Bankscope and Bankfocus databases for a panel of 141 banks over the period 2009–2018, we find a strong positive and significant relationship between the time elapsed since banks' involvement in mobile money and their performance considering bank profitability, efficiency, and stability. In further investigations, we explore possible channels by showing how bank size, deposit collection and diversification levels alter such an association. Our results are robust to using instrumental variables, controlling for bank and macro level confounding factors, bank fixed effects and considering alternative measures of bank performance and bank‐MNO partnerships. Overall, our findings highlight the bright side of cooperation between banks and mobile network operators in the provision of mobile money.

Date: 2024-12-22
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Published in International Journal of Finance and Economics, 2024, ⟨10.1002/ijfe.3100⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04881044

DOI: 10.1002/ijfe.3100

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