Conditional Determinants of Mobile Phones Penetration and Mobile Banking in Sub-Saharan Africa

Asongu, Simplice (2015): Conditional Determinants of Mobile Phones Penetration and Mobile Banking in Sub-Saharan Africa. Forthcoming in: Journal of the Knowledge Economy

Abstract

Using twenty-five policy variables, we investigate determinants of mobile phone/banking in 49 Sub-Saharan African countries with data for the year 2011. The determinants are classified into six policy categories, notably: macroeconomic, business/bank, market-related, knowledge economy, external flows and human development. The empirical evidence is based on contemporary and non-contemporary Quantile regressions. The following implications are relevant to the findings. First, mobile phone penetration is positively correlated with: (i) education, domestic savings, regulation quality and patent applications, especially at low initial levels of mobile penetration; (ii) bank density; (iii) urban population density and (iv) internet penetration. Second, the use of the mobile to pay bills is positively linked with: (i) trade and internet penetration, especially in contemporary specifications and (ii) remittances and patent applications, especially at low initial levels of the dependent variable. Third, using the mobile to send/receive money is positively correlated with: internet penetration and human development, especially in the contemporary specifications. Fourth, mobile banking is positively linked with: (i) trade in contemporary specifications; (ii) remittances and patent applications at low initial levels of the dependent variable and (iii) internet penetration and human development, with contemporary threshold evidence. The policy implications are articulated with incremental policy syndromes.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mobile phones; Mobile banking; Development; Africa
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L96 - Telecommunications; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

References

Abu S. T., & Tsuji, M., (2010). “The Determinants of the Global Mobile Telephone Deployment: An Empirical Analysis”, Informatica Economică, 14(3), pp. 21-32.

Ajzen, I., (1991). “The theory of planned behaviour”. Organizational Behavior and Human Decision Processes, 50, pp. 179-211.

Ajzen, I., & Fishbein, M. (1980). Understanding attitudes and predicting social behavior. Englewood Cliffs, NJ: Prentice-Hall.

Aker, J. C., & Fafchamps, M., (2010). “How Does Mobile Phone Coverage Affect Farm-Gate Prices? Evidence from West Africa”, Department of Economics and the Fletcher School, Tufts University.

Akpan, U. S., Isihak, S. R., & Asongu, S. A., (2014). “Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT”, African Governance and Development Institute Working Paper No. 14/002.

Akturan, U., & Tezcan, N., (2012). “Mobile banking adoption of the youth market: Perceptions and intentions”, Marketing Intelligence & Planning, 30, (4), pp. 444-459.

Allen, F., Otchere, I., & Senbet, L. W., (2011). “African financial systems: A review”, Review of Development Finance, 1(2), pp. 79-113.

Al Surikhi, H. F., (2012). “Knowledge and Financial Management in Households: An Examination of Married Women’s Perspectives in Chadbourn, North Carolina”, Capstone Collection, Paper No. 2489.

Alsheikh, L., & Bojei, J., (2014). “Determinants Affecting Customer’s Intention to Adopt Mobile Banking in Saudi Arabia”, International Arab Journal of e-Technology, 3(4), pp. 210-219.

Asongu, S. A., (2013). “How has mobile phone penetration stimulated financial development in Africa”, Journal of African Business, 14(1), pp. 7-18.

Asongu, S. A., (2015a). “Mobile banking and mobile phone penetration: which is more pro-poor in Africa?”, African Finance Journal: Forthcoming.

Asongu, S. A., (2015b). “The impact of mobile phone penetration on African inequality”, International Journal of Social Economics, 42(8), pp. 706-716.

Asongu, S. A., (2015c). “Reinventing foreign aid for inclusive and sustainable development: Kuznets, Piketty and the great policy reversal”, Journal of Economic Surveys.

Asongu, S. A., (2015d). “On Taxation, Political Accountability and Foreign Aid: Empirics to a Celebrated Literature”, South African Journal of Economics, 83(2), pp. 180-198.

Asongu, S. A., (2014a). “Financial development dynamic thresholds of financial globalization: evidence from Africa”, Journal of Economic Studies, 41(2), pp. 166-195.

Asongu, S. A., (2014b). “The impact of health worker migration on development dynamics: evidence of wealth-effects from Africa”, The European Journal of Health Economics, 15(2), pp. 187-201.

Asongu, S. A., (2014c). “Knowledge Economy Gaps, Policy Syndromes and Catch-Up Strategies: Fresh South Korean Lessons to Africa”, African Governance and Development Institute WP/14/04.

Asongu, S. A., & De Moor, L., (2015). “Recent advances in finance for inclusive development: a survey”, African Governance and Development Institute Working Paper No. 15/005.

Asongu, S. A., & Kodila-Tedika, O., (2015). “Conditional determinants of FDI in fast emerging economies: an instrumental quantile regression approach”, African Governance and Development Institute Working Paper No. 15/003.

Asongu, S. A., & Nwachukwu, J. C., (2015a). “Drivers of FDI in Fast Growing Developing Countries: Evidence from Bundling and Unbundling Governance”, African Governance and Development Institute Working Paper No. 15/001.

Asongu, S. A., & Nwachukwu, J. C., (2015b). “Revolution empirics: predicting the Arab Spring”, Empirical Economics: Forthcoming.

Asongu, S. A., & Nwachukwu, J. C., (2016). “The Role of Lifelong Learning in Political Stability and Non-violence: Evidence from Africa”, Journal of Economic Studies: Forthcoming.

Ba, J., & Ng S., (2006). “Confidence intervals for diffusion index forecasts and inference for factor-augmented regression”, Econometrica, 74(4), pp. 1133-1150.

Bai, J., (2003). “Inferential theory for factor models of large dimensions”. Econometrica, 71 (1),pp.135-173.

Bai, J., (2009). “Panel data models with interactive fixed effects”. Econometrica, 77(4), pp. 1229-1279.

Bagozzi, R., (1982). “A field investigation of causal relations among cognitions, affect, intentions, and behaviour”, Journal of Marketing Research, 19 (4), pp. 562-584.

Bauer, S., De Niet, J., Timman, R., & Kordy, H., (2010). “Enhancement of care through self-monitoring and tailored feedback via text messaging and their use in the treatment of childhood overweight”, Patient Education and Counseling, 79 (2010), pp. 315-319.

Billger, S. M., & Goel, R. K., (2009). “Do existing corruption levels matter in controlling corruption? Cross-country quantile regression estimates”, Journal of Development Economics, 90, pp. 299-305.

Caulderwood, K., (2015). “Mobile Banking Market In Sub-Saharan Africa Could Be Worth $1.3B In Four Years”, International Business Times, http://www.ibtimes.com/mobile-banking-market-sub-saharan-africa-could-be-worth-13b-four-years-1788648 (Accessed: 24/03/2015).

Chan, A., & Jia, T., (2011). “The Role of Mobile Banking in Facilitating Rural Finance: Reducing Inequality in Financial Services between Urban and Rural Areas”, Accenture Banking Services, http://www.accenture.com/SiteCollectionDocuments/PDF/PoV-Mobile-Banking-051611-EN.pdf (Accessed: 17/03/2015).

Cudjoe, A. G., Anim, P. A., & Nyanyofio, J., (2015). “Determinants of Mobile Banking Adoption in the Ghanaian Banking Industry: A Case of Access Bank Ghana Limited”, Journal of Computer and Communications, 3, pp. 1-19.

Da Costa, T. M. Salomão, P. L., Martha, A. S., Pisa, I. T., & Sigulem, D., (2010). “The impact of short message service text messages sent as appointment reminders to patients’ cell phones at outpatient clinics in São Paulo, Brazil”, International Journal of Medical Informatics, 79 (2010), pp. 65-70.

Daud, M., Kassim, N., Said, W., & Noor, M., (2011). “Determining Critical Success Factors of Mobile Banking Adoption in Malaysia”, Australian Journal of Basic and Applied Sciences, 5(9), pp. 252-265.

Davis, F., (1989). “Perceived usefulness, perceived ease of use, and user acceptance of information technology”, MIS Quarterly, 13(3), pp. 319-340.

Doshi, K. P., & Narwold, A., (2014). “Determinants of Mobile Phone Penetration Rates in Asia and Africa: A Panel Data Analysis”, Proceedings of 9th International Business and Social Science Research Conference6 - 8 January, 2014, Novotel World Trade Centre, Dubai, UAE.

E-agriculture (2012). “Using ICT to enable Agricultural Innovation Systems for Smallholders”, e-source book, ICT In Agriculture, Connecting Small Holders to Knowledge, Networks and Institutions, (Forum 4, September 2012). http://www.fao.org/docrep/018/ar130e/ar130e.pdf (Accessed: 18/03/2015).

Efobi, U & Osabuohien, E., (2015). Technological Utilization in Africa: How Do Institutions Matter? In S. Majumdar, S. Guha & N. Marakkath (eds.) Technology and Innovation for Social Change (pp.67-84). New Delhi: Springer. DOI: 10.1007/978-81-322-2071-8_5.

Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention, and behavior: An introduction to theory and research. Reading, MA: Addison-Wesley.

Fosu, A., (2013). “Growth of African Economies: Productivity, Policy Syndromes and the Importance of Institutions”, Journal of African Economies, 22(4), pp. 523-551.

Greenaway-McGrevy, R., Han, C., & Sul, D., (2012). “Asymptotic distribution of factor aug- mented estimators for panel regression”. Journal of Econometrics, 169 (1), pp. 48-53.

Gu, J-C., Lee, S-C., & Suh, Y-H., (2009). “Determinants of behavioral intention to mobile banking”, Expert Systems with Applications, 36(9), pp. 11605-11616.

Hoffman, J. A., Cunningham, J. R., Suleh, A. J., Sundsmo, A., Dekker, D., Vago, F., & Munly, K., (2010). “Mobile Direct Observation Treatment for Tuberculosis Patients A Technical Feasibility Pilot Using Mobile Phones in Nairobi, Kenya”, American Journal of Preventive Medicine, 39(1), pp. 78-80.

Jolliffe, I. T. (2002), Principal Component Analysis (2nd Ed.) New York: Springer.

Jonathan, D., & Camilo, T. (2008). Mobile banking and economic development: Linking adoption, impact and use. Asian Journal of Communication, 18(4), 318-322.

Kaiser, H. F., (1974). “An index of factorial simplicity” Psychometrika 39, pp. 31-36.

Kazi, A. K., & Mannan, M. A., (2013). “Factors affecting adoption of mobile banking in Pakistan: Empirical Evidence”, Bukhari Institute of Technology, Karachi, Pakistan https://ideas.repec.org/a/rbs/ijbrss/v2y2013i3p54-61.html (Accessed: 26/03/2015).

Kirui, O. K., Okello, J. J., Nyikal, R. A., & Njiraini, G. W., (2013). “Impact of Mobile Phone-Based Money Transfer Services in Agriculture: Evidence from Kenya”, Quaterly Journal of International Agriculture, 52(2), pp. 141-162.

Kliner, M., Knight, A., Mamvura, C., Wright, J., & Walley, J., (2013). “Using no-cost mobile phone reminders to improve attendance for HIV test results: a pilot study in rural Swaziland”, Infectious Diseases of poverty, 2(12), pp. 1-7.

Koenker, R., & Hallock, F. K., (2001). “Quantile regression”, Journal of Economic Perspectives, 15, pp.143-156.

Madden, G., Coble-Neal, G., & Dalzell, B., (2004). “A dynamic model of mobile telephony subscription incorporating a network effect”, Information Economics and Policy, 28(2), pp. 133-144.

Madden, G., & Coble-Neal, G., (2004). “Economic determinants of global mobile telephony growth”, Information Economics and Policy, 16(4), pp. 519-534.

Maurer, B. (2008, May). Retail electronic payments systems for value transfers in the developing world. Department of Anthropology, University of California.

McKenzie C, R., & McAleer M (1997). “On efficient estimation and correct inference in models with generated regressors: A general approach." Japanese Economic Review, 48(4), pp. 368-389.

Medhi, I., Ratan, A., & Toyama, K., (2009). “Mobile-Banking Adoption and Usage by Low-Literate, Low-Income Users in the Developing World”, Internationalization, Design and Global Development, Lecture Notes in Computer Science, Volume 5623, 2009, pp 485-494.

Micheal, H., (2013). “Mobile penetration in Africa is now at 80% and growing fast”, Phone Area, http://www.phonearena.com/news/Mobile-penetration-in-Africa-is-now-at-80-and-growing-fast_id50014 (Accessed: 19/03/2015).

Mishra, V., & Bisht, S. S., (2013). “Mobile banking in a developing economy: A customer-centric model for policy formulation”, Telecommunications Policy, 37, pp. 503-514.

Mosheni-Cheraghlou, A., (2013). “Mobile Banking: Who is in the Driver’s Seat?”, Working for a World Free of Poverty, The World Bank, http://blogs.worldbank.org/allaboutfinance/mobile-banking-who-driver-s-seat (Accessed: 19/03/2015).

Mpogole, H., Usanga, H., & Tedre, M., (2008). “Mobile phones and poverty alleviation: a survey study in rural Tanzania”, Proceedings of M4D 2008, Karlstad University, Sweden, pp. 62-72.

Muto, M., & Yamano, T., (2009). “The Impact of Mobile Phone Coverage Expansion on Market Participation: Panel Data Evidence from Uganda”, World Development, 37(12), pp. 1887-1896.

Nguena, C. L., Tchana, T. F., & Zeufack, A., (2015). “Housing Finance and Inclusive Growth: Benchmarking, Determinants and Effects’, AAYE Policy Research Working Paper Series, No. 15/027.

Ojo, A., Janowski, T., & Awotwi, J., (2012). “Enabling development through governance and mobile technology”, Government Information Quarterly, 30 (2013), pp. S32-S45.

Okada, K., & Samreth, S. (2012). “The effect of foreign aid on corruption: A quantile regression approach”, Economic Letters, 11, pp. 240-243.

Oluwatobi, S., Efobi, U.R., Olurinola, O.I., Alege, P. (2014), Innovation in Africa: Why Institutions Matter, South African Journal of Economics. http://onlinelibrary.wiley.com/doi/10.1111/saje.12071/abstract

Ondiege, P., (2013). “Fostering financial inclusion with mobile banking”, African Development Bank. http://www.proparco.fr/webdav/site/proparco/shared/PORTAILS/Secteur_prive_developpement/PDF/SPD16/SPD16_Peter_Ondiege_UK.pdf (Accessed: 03/02/2015).

Ondiege, P., (2010). “Mobile Banking in Africa: Taking the Bank to the People”, Africa Economic Brief, 1(8), pp. 1-16.

Osabuohien, E. (2008), “ICT and Nigeria Bank Reforms: Analysis of Anticipated Impacts in Selected Banks”, Global Journal of Business Research, 2(2), pp. 67-76.

Osabuohien, E. (2010), “Technological Innovation and Africa’s Quest for Development in the 21st Century”, Covenant Univerity, Nigeria. In book: Nanotechnology and Microelectronics: Global Diffusion, Economics and Policy, Chapter: 22, Publisher: IGI-Global, Editors: N. Ekekwe, pp. 382-398

Osabuohien, E., & Efobi, U. R., (2012) “Technological diffusion and Economic Progress in Africa: Challenges and Opportunities”, In book: Disruptive Technologies, Innovation and Global Redesign: Emerging Implications, Chapter: 24, Publisher: GI-Global, Editors: N. Ekekwe, N. Islam, pp.425-440.

Oxley L, & McAleer, M., (1993). “Econometric issues in macroeconomic models with generated regressors.” Journal of Economic Surveys, 7(1), pp. 1-40.

Pagan, A., (1984). “Econometric issues in the analysis of regressions with generated regressors”, International Economic Review, 25(1), pp. 221-247.

Perez, F., Gonzalez, C. J., & Aaronson, X., (2011). “Village banking development model: FINCA Costa Rica”, Journal of Business Research, 64 (2011), pp. 316-324.

Pesaran, M. H., (2006). “Estimation and inference in large heterogeneous panels with a mul- tifactor error structure”. Econometrica, 74 (4), pp. 967-1012.

Penard, T., Poussing, N., Yebe, G. Z., & Ella, P. N., (2012). “Comparing the Determinants of Internet and Cell Phone Use in Africa : Evidence from Gabon ”, Communications & Strategies, 86, pp. 65-83.

Qiang, C. Z., Kuek, S. C., Dymond, A., & Esselaar, S., (2011). “Mobile Applications for Agricultural and Rural Development”, ICT Sector Unit, World Bank http://siteresources.worldbank.org/INFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/Resources/MobileApplications_for_ARD.pdf (Accessed: 17/03/2015).

Singh, A. B., (2012). “Mobile banking based money order for India Post: Feasible model and assessing demand potential”, Procedia - Social and Behavioral Sciences, 37, pp. 466-481.

Ssozi, J., & Amlani, S., (2015) “The Effectiveness of Health Expenditure on the Proximate and Ultimate Goals of Healthcare in Sub-Saharan Africa”, Economics Department, Hankamer School of Business, Baylor University.

Ssozi, J., & Asongu, S. A., (2015). “The Effects of Remittances on Output per Worker in Sub-Saharan Africa: A Production Function Approach”, South African Journal of Economics: Forthcoming.

Stock, J. H. & M. W. Watson (2002). “Forecasting using principal components from a large number of predictors”. Journal of the American Statistical Association, 97 (460), pp.1167-1179.

Tseng, F-M & Lo, H-Y., (2011). “Antecedents of consumers’ intentions to upgrade their mobile phones”, Telecommunications Policy, 35(1), pp. 74-86.

UNCTAD. (2002). World Investment Report: Transnational Corporations and Export Competitiveness. New York: United Nations.

Wang, Y-S., Wu, M-C., & Wang, H-Y., (2009). “Investigating the determinants and age and gender differences in the acceptance of mobile learning”, British Journal of Educational Technology, 40(1), pp. 92-118.

Warren, M., (2007). “The digital vicious cycle: links between social disadvantage and digital exclusion in rural areas”. Telecommunications Policy, 31(6-7), pp. 374-388.

West, D. M., (2013). “Improving Health Care through Mobile Medical Devices and Sensors”, Centre for Technology and Innovation at Brookings, http://www.brookings.edu/~/media/research/files/papers/2013/10/22%20mobile%20medical%20devices%20west/west_mobile%20medical%20devices_v06 (Accessed: 19/03/2015).

Westerlund, J., & Urbain, J-P., (2013a). “On the estimation and inference in factor-augmented panel regressions with correlated loadings”, Economic Letters, 119, pp. 247-250.

Westerlund, J., & Urbain, J-P., (2013b). “On the implementation and use of factor-augmented regressions in panel data”, Journal of Asian Economics, 28, pp. 3-11.

Westerlund, J., & Urbain, J-P., (2012). “Cross-sectional averages versus principal components”, Maastricht University, RM/11/053.

Yousafzai, S. Y., Foxall, G. R., & Pallister, J. G., (2010). “Explaining Internet Banking Behavior: Theory of Reasoned Action, Theory of Planned Behavior, or Technology Acceptance Model?”, Journal of Applied Social Psychology, 2010, 40(5), pp. 1172-1202.

Yousafzai, S., Foxall, G. R., & Pallister, J. (2007a). “Technology acceptance: A meta-analysis of the TAM. Part 1”. Journal of Modelling in Management, 2(3), pp. 251-280.

Yousafzai, S., Foxall, G. R., & Pallister, J. (2007b). Technology acceptance: A meta-analysis of the TAM. Part 2. Journal of Modelling in Management, 2(3), pp. 281-304.