Abstract
The financial landscape of sub-Sahara Africa is undergoing major changes due to the advent of FinTech, which has seen mobile payments boom in the region. This paper examines the salient role of mobile payments in traditional banks’ drive toward financial accessibility in sub-Sahara Africa by using panel econometric approaches that consider the issues of independencies among cross-sectional residuals. Using data from the World Development Index (WDI) 2011–2017 on 11 countries in the region, empirical results from cross-sectional dependence (CD) tests, panel unit root test, panel cointegration test, and the fully modified ordinary least squares (FMOLS) approach indicates that (i) the panel time series data are cross-sectionally independent, (ii) the variables have the same order of integration and are cointegrated, and (iii) growth in mobile payment transactions had a significant positive relationship with formal account ownership, the number of ATMs, and number of new bank branches in the long-run. The paper therefore confirms that the institutional structure of traditional banks that makes them competitive, irrespective of emerging disruptive technologies, has stimulated overall financial accessibility in the region leading to overall sustainable growth in the financial sector. We conclude the paper with feasible policy suggestions.
Highlights
The union between technology and finance has significantly reshaped the global financial landscape in the past decade due to the growing diffusion rate of financial technology–related products and services [1]
Formal account ownership means individuals aged 15 years and above having an account with a formal financial institution within the past 12 months, number of bank automated teller machines (ATMs) means the total number of ATMs within a country per 100,000 adults, number of bank branches means the number of commercial bank branches within a country per 100,000 adults, mobile payment transactions means the total number of mobile payment transactions within a year, financial sector rating measures the performance of the overall financial sector of a country on a scale of 1–5, and population means the total population of a country aged 15 and above on a yearly basis
It is inferred that the response variable POP, formal account ownership (FAO), number of bank ATMs (NATM), and financial sector rating (FSR) are negatively skewed with the exception of mobile payment transactions (MPT) and number of bank branches (NBB) which are flattened to the right compared to the normal curve
Summary
The union between technology and finance has significantly reshaped the global financial landscape in the past decade due to the growing diffusion rate of financial technology–related products and services [1]. FinTech is an industry of companies using technology to make financial systems and the delivery of financial products and services more efficient [2]. Statistics indicate that sub-Sahara Africa alone holds over 50% share of the total global customer base, and with the mobile phone penetration expected to grow up to 500 million subscribers by the year 2020, the region has huge potential in this domain of FinTech (the Mobile Economy Sub-Saharan Africa 2018 report). The introduction of mobile payment in sub-Sahara Africa championed mainly by Telecos has been hailed as one of the grand financial innovations to improve the status of financial inclusion in the region as a result of the failed efforts of traditional banks to financially include many in preceding decades [3,4]
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.