Banking technology and cashless economy in selected Sub-Saharan African countries: does education matter?

Abstract

PurposeThis study aims to analyze the effect of banking technology [automated teller machine (ATM) and mobile cellular devices (MOBs)] and other traditional factors on the level of currency in circulation for a sample of 21 selected sub-Saharan African (SSA) countries. It also assessed the mitigating effect of education on the relationship between banking technology and the cashless economy.Design/methodology/approachThe study used a panel data approach to design a cashless economy model with banking technology – ATM and MOBs – as well as their interaction with education as regressors.FindingsThis study finds that MOB is significant for promoting a cashless economy, whereas ATM is insignificant in sample SSA countries. The level of education and the number of bank branches were also found to be significant in promoting a cashless economy. The interaction between education and ATM was insignificant but negatively signed, whereas that between education and MOB was significant but had a positive sign.Research limitations/implicationsNon-availability of data restricted this work to a panel study of selected SSA countries. Subsequent studies should consider single-country case studies.Practical implicationsFindings from the study imply that for banking technology to drive a cashless economy effectively, education has to be improved.Originality/valueThe ratio of cash in circulation to total money supply was used as a measure of the cashless economy. The study also evaluated the moderating effect of education on banking technology.