This paper investigates the impact of financial innovations on the stability of money velocity. The paper contributes to the existing literature in three ways; first, we develop a simple analytical framework for money velocity taking into account the effect of financial innovations. Second, we test the model on Ugandan time series data using the ARDL bounds testing approach. Third, we check for the stability of the long-run money velocity function. Results show significant negative and positive effects of financial innovations on the money velocity in the short and long run, respectively. In addition, the long-run money velocity equation is stable despite the financial innovations that have evolved over time. Furthermore, other macroeconomic determinants of money velocity, including real income, the 91-day treasury bill rates, inflation expectations and the exchange rate exhibited a significant and positive long-run relationship with money velocity except for real income. These results suggest that financial innovations have not altered the long-run stability of money velocity in Uganda. Thus, given the importance of financial innovations in enhancing the access to financial services, we recommend that more technological advances and diversification of financial products should be enhanced so as to improve financial sector development and overall economic growth.

Background: Mobile money services have been associated with unprecedented access to financial services, notably to under-banked and unbanked populations. Thus, mobile money opens a channel through which to examine the supply of private sector credit in Uganda. This study investigates how mobile money services influence private sector credit growth.

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Purpose The purpose of this paper is to examine the potential role of money supply and agricultural informal cross-border trade (ICBT) in Uganda’s food price processes. Design/methodology/approach The econometric analysis is based on two separate but complementary approaches: vector error correction modeling and Granger causality testing. Findings The results indicate that long-run domestic food prices adjust to money supply, agricultural output and exchange rate movements. However, the findings do not provide sufficient evidence to support the proposition that agricultural ICBT is an important long-run driver of food price in Uganda. The pair-wise Granger causality test results reveal a unidirectional causality from food prices to agricultural output; unidirectional causality from money supply to food prices; bidirectional causality between food prices and nominal exchange rates; unidirectional causality running from rainfall to food prices; and unidirectional causality running from agricultural ICBT to agricultural output. Social implications Understanding the underlying drivers of food inflation is critically important because food prices are critically important for food security, social stability and general household welfare. Originality/value The major innovation in this paper is attempt to model demand side determinants of food prices by focusing on the role of money and ICBT.

This paper investigated the main causes of the continuously large interest rate spreads in Uganda's banking sector for the 1995 to 2010 period. The main approach used was the test for cointegration where the Engle and Granger (1987) two-step procedure was applied to test for the long-run relationship. The error correction model was applied for short run relationship with the error correction term to determine the speed of adjustment between the short-run and the long-run. The variables that were investigated in this study included the bank rate, the treasury bill rate, exchange rate volatilities (XRTV), M2/GDP and the proportion of non-performing loans to total private sector credit. The empirical results show that the bank rate, treasury bill rate, and non performing loans significantly and positively affect the interest rate spreads, M2/GDP and real GDP were significant and negatively influence interest rate spreads both in the short and long-run period.