An ever-increasing body of research has demonstrated the positive impact of mobile money on individuals, households and businesses. That said, the extent to which mobile money impacts a country’s macroeconomic and financial sector development has not been fully examined. In addition to this evidence gap, there is a perception throughout the formal financial services sector that mobile money providers are: (i) disintermediating traditional providers of banking services without being subjected to the same level of regulation, and; (ii) potentially introducing systemic risks to payments systems.
To address this evidence gap, and provide responses to those concerns, GSMA Mobile Money and GSMA Intelligence have undertaken a study to assess the impact of mobile money on monetary and financial stability across several countries in Sub-Saharan Africa, something which – to our knowledge – has not been done previously. To achieve this, we looked at trends in a number of monetary and financial outcomes, both in countries where mobile money adoption is widespread and where uptake has been limited.
In terms of monetary (or price) stability, we find that mobile money can enable more effective monetary policy by transferring currency and assets into the formal financial system and bringing a greater share of economy activity under the influence of central bank interest rates. We do not find any correlation between mobile money adoption and inflation, which is consistent with recent research on the topic.
Regarding financial stability, there is currently no evidence to suggest that mobile money poses a systemic risk to the financial system or other payment systems. Even in the most mature markets, mobile money accounts for a much smaller proportion of transaction values than transaction volumes, highlighting the ‘high-volume, low-value’ nature of the product.
In addition, we find that mobile money expansion is associated with growth in the commercial banking sector, suggesting that concerns around the displacement of traditional banks are unfounded. Instead, our analysis indicates that mobile money is complementary to commercial banking services and can enable its diversification and expansion – or at the very least, it has no discernible impact.
Given the broad scope of countries covered in the study, these findings can help to inform policy discussions and support dialogue between regulators, mobile money providers and other financial service providers on reforms that can promote growth in the financial sector. It will be important to build on the research by utilising the data in more sophisticated analysis in order to isolate and better quantify the direct impact of mobile money on financial sector development. We therefore welcome your feedback on the report and hope that you enjoy reading it.
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