Mobile Money and Traditional Banking

Proceedings of The 10th International Conference on New Ideas in Management, Economics and Accounting

Year: 2022



Mobile Money and Traditional Banking

Zana Beqiri Luma



We use the advent of a mobile money innovation in Kenya in 2007 as an interesting laboratory to investigate its impact on the performance and outreach of commercial banks. Combining the 2006, 2009 and 2013 FinAccess household surveys with bank financial statement and branch penetration data at the county level we find that banks more exposed to the competitive pressure induced by the mobile money innovation improved their performance and expanded their outreach towards households traditionally excluded by formal financial institutions. Additional results further show that households report less supply side barriers to financial access in counties more exposed to the advent of the mobile money innovation. These results highlight the importance of increasing the contestability of banking markets in order to promote financial inclusion and a more competitive banking sector.

keywords: M-Pesa, financial inclusion, bank competition, traditional banking, mobile money.