How important is mobile telephony for economic growth? Evidence from MENA countries

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The explosion of mobile telephony in recent times has led to the emergence of a significant volume of literature. One area that has been relatively under-researched has been the role of mobile telephony in impacting economic growth and the relevance of financial inclusion in this respect. Using data on MENA countries during 2001-2012, this paper aims to examine this issue within an empirical framework. Design/methodology/approach -The analysis is based on longitudinal data for the period 2001-2012 and examines the interrelationships among per capita income, financial inclusion and mobile telephony.To take on board this interrelationship, the authors use a simultaneous equation model. In contrast to the ordinary least squares, 3SLS exploits the information that the disturbance terms in the two structural terms are contemporaneously correlated, thereby producing consistent estimates. Findings -The analysis suggests a significant relationship among these variables. In particular, a 1 per cent increase in the fraction of population using mobile telephony improves incomes by roughly 0.3 per cent points, whereas a similar 1 per cent increase in financial inclusion has double the impact on income. The findings also support a convex, non-linear relationship between income and cellular penetration. Robustness tests lend credence to these findings. Originality/value -Although there are several studies on mobile telephony and growth, this paper provides a completely original contribution in the area of financial inclusion, linking the development of access to mobile communication to new channels for the unbanked population in the Arab economies.

Mobile financial services, financial inclusion, and development: A systematic review of academic literature

“…In our selected research, the link between MFS and economic growth is discussed in relation with the increasing coverage of financial services (Kpodar & Andrianaivo ). For instance, Ghosh () empirically examined the impact of financial inclusion on economic development by analysing data from the Middle East and North African countries. The study demonstrated that a 1% increase in the portion of the population who use mobile devices improves household income by roughly 0.3% points.…”

“…On the other hand, a similar 1% increase in financial inclusion has doubled the impact on household income. Based on this analysis, Ghosh () concluded that financial inclusion actually contributes to economic development in developing countries. Kikulwe, Fischer, and Qaim () also empirically showed that smallholder farmers who use MFS in the rural areas of Kenya tend to have higher profits than those who do not use the services.…”

Mobile Money, Financial Inclusion and Development: A Review With Reference to African Experience

“…Work on Africa that uses the UNDP's measure of IHDI supports these arguments (Asongu, 2013; Asongu et al ., 2016). Mobile and fixed line penetration also contribute positively to growth in Middle East and North African countries (Sassi and Goaied, 2013; Ghosh, 2016).…”

Mobile Banking: A Potential Catalyst for Financial Inclusion and Growth in Pakistan

“…These improvements in making the unbanked population a part of the formal financial system by improving their access to financial services can serve as a poverty eradication tool, foster inclusive growth and help countries meet the Millennium Development Goals (Chibba, 2009). Ghosh (2016) finds that mobile telephony in India has had a positive and significant impact on growth, financial inclusion and loan disbursement.…”

“…The mobile banking platform, which comprises mobile or m-wallets and over-the-counter (OTC) transactions, has grown rapidly around the world and has the potential to reduce barriers to financial inclusion and thus transform economies (Klein & Mayer, 2011). The benefits are even more pronounced for economies with a weak financial architecture and where formal banking entails considerable costs in terms of time and distance (Ghosh, 2016).…”