nep-mfd New Economics Papers
on Microfinance
Issue of 2021‒04‒05
two papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Law, mobile money drivers and mobile money innovations in developing countries By Simplice A. Asongu; Peter Agyemang-Mintah; Rexon T. Nting
  2. Subsidising Inclusive Insurance to Reduce Poverty By Jos\'e Miguel Flores Contr\'o; Kira Henshaw; Sooie-Hoe Loke; S\'everine Arnold; Corina Constantinescu

  1. By: Simplice A. Asongu (Yaounde, Cameroon); Peter Agyemang-Mintah (Abu Dhabi, United Arab Emirate); Rexon T. Nting (London, UK)
    Abstract: This study investigates how the rule of law (i.e. law) modulates demand- and supply-side drivers of mobile money to influence mobile money innovations (i.e. mobile money accounts, the mobile phone used to send money and the mobile phone used to receive money) in developing countries. The following findings from Tobit regressions are established. First, from the demand-side linkages, law modulates: (i) bank accounts and automated teller machine (ATM) penetration for negative interactive relationships with mobile money innovations and (ii) bank sector concentration for a positive interactive relationship with mobile money accounts. Second, from supply-side linkages, law interacts with: (i) mobile subscriptions for a negative relationship with the mobile phone used to send money; (ii) mobile connectivity coverage for a negative nexus on the mobile phone used to receive money and (iii) mobile connectivity performance for a negative influence on the mobile phone used to send/receive money. Policy implications are discussed in the light of enhancing the rule of law as well as improving mobile phone subscription, connectivity and performance dynamics.
    Keywords: Mobile money; technology diffusion; financial inclusion; inclusive innovation
    JEL: D10 D14 D31 D60 O30
    Date: 2021–01
  2. By: Jos\'e Miguel Flores Contr\'o; Kira Henshaw; Sooie-Hoe Loke; S\'everine Arnold; Corina Constantinescu
    Abstract: In this article, we consider a compound Poisson-type model for households' capital. Using risk theory techniques, we determine the probability of a household falling under the poverty line. Microinsurance is then introduced to analyse its impact as an insurance solution for the lower income class. Our results validate those previously obtained with this type of model, showing that microinsurance alone is not sufficient to reduce the probability of falling into the area of poverty for specific groups of people, since premium payments constrain households' capital growth. This indicates the need for additional aid particularly from the government. As such, we propose several premium subsidy strategies and discuss the role of government in subsidising microinsurance to help reduce poverty.
    Date: 2021–03

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