| Abstract: |
Purpose: We make available new critical macroeconomic financial indicators to
the research community. Nothing is more powerful than a phenomenon whose time
has come. What is the macroeconomic empirical context of growing mobile
banking? Perhaps one of the deepest empirical hollows in the financial
development literature has been the equation of financial depth in the
perspective of money supply to liquid liabilities. This equation has put on
the margin, a burgeoning phenomenon whose time has come: mobile banking.
Design/Methodology: We decompose financial depth into formal, semi-formal and
informal sectors and then assess the incidence of mobile banking on each
constituent. Thus the IFS (2008) definition of the financial system is
extended to incorporate an informal financial sector in line with
Asongu(2011). Three hypotheses based on eight propositions are tested using a
plethora of endogeneity-robust and HAC standard errors estimation techniques.
Findings: The informal financial sector (a previously missing component in the
definition of money supply: M2) is positively affected by mobile banking,
while the incidence of mobile banking is negative on formal and semi-formal
financial intermediary development. The paper contributes at the same time to
the macroeconomic literature on measuring financial development and responds
to the growing field of economic development by means of informal financial
sector promotion, microfinance and mobile banking. It suggests a practicable
way to disentangle the effects of mobile banking on various financial sectors.
Research implications: Since empirical research on the phenomenon has been
hampered by lack of data, we make available macroeconomic financial indicators
to the research community. The present paper is also in response to the
numerous calls on the research gap in the literature that emphasize the need
for research on mobile banking. The mobile-finance nexus is gaining momentum,
yet relatively little scholarly research explores the incidence of these
m-banking/m-payment (systems) on financial development. Practical
implications: (1) There is a burgeoning role of informal finance in developing
countries. (2) The incidence of the growing phenomenon of mobile banking
cannot be effectively assessed at a macroeconomic level by traditional
financial development indicators. (3) It is a wake-up call for scholarly
research on informal financial intermediary development indicators which will
guide monetary policy; since a great chunk of the monetary base (M0) in less
developed countries is now captured by mobile banking. Originality/value: New
financial indicators for mobile banking assessment based on insufficiencies in
the financial development literature: liquid liabilities as applied to
developing countries is misleading because a great chunk of the monetary base
does not transit through the banking system but via informal networks like the
growing phenomenon of mobile banking. |