Credit for households in Ghana: Has mobile money (momo) improved inclusive access?

Abstract

This article interrogates the effect of mobile money on households’ access to credit services. It also compares the mobile money effect with the effect of owning account in other financial institutions (excluding commercial banks), and explores complementarity effects between them as well as heterogeneity effects across gender and locality of residence. Using treatment effect models and observational data from the seventh round of the Ghana Living Standards Surveys, the results generally show that mobile money increases the probability of applying for credit but has no effect on the amount of credit received. The effect on credit application is only found among households that also own accounts in other financial institutions, except for male headed households, of whom we observe a significant effect among those that own only mobile money accounts. The complementary effect of mobile money to the effect of other financial institutions on credit application are higher for male headed households and households in rural communities than their respective counterparts. These results are robust to different treatment effect estimators including the doubly robust augmented inverse probability estimator and the inverse probability regression adjustment estimator with several controls including health shocks in their outcome models. The findings call into question the extent to which mobile money facilitates the provision of inclusive financial services beyond serving as a tool for payments and savings. The findings bear significant policy implications with regards to how to broaden the financial inclusion impact of mobile money.