The Effect of Financial Technology on Money Demand: Evidence from Selected African States

Mlambo, Courage; Msosa, Steven Kayambazinthu

doi:10.35808/ersj/1542

Cited by 3 publications

(4 citation statements)

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“…Researchers in the EAC have used various proxies to measure financial innovation. For instance, Sichei and Kamau (2012) used ATMs, Ndirangu and Nyamongo (2015) used time deposit ratio/currency outside banks, and Munene [8] and Mlambo and Msosa [4] and Muchlisin (2021) used volume of M-PESA and ATM transactions as proxies for financial innovation. The results of this study indeed confirm that financial innovation plays a significant role in influencing money demand.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The demand for money at the global level has increased extensively [4]. This is because a higher demand for money is likely to result in huge economic growth [4].…”

Section: Introductionmentioning

confidence: 99%

“…The demand for money at the global level has increased extensively [4]. This is because a higher demand for money is likely to result in huge economic growth [4]. Generally, the trend of money demand among several countries globally has changed drastically over the past few years.…”

Section: Introductionmentioning

confidence: 99%

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Effect of Financial Innovation on Money Demand in the East African Community

Kipchirchir

Kalio

Kibet

2023

AJEBA

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Tremendous financial changes have been witnessed in the East African Community’s (EAC’s) macroeconomic landscape over the past few years. These changes can shift various parameters of the money demand model. Many previous empirical studies examined the effect of scale and opportunity cost of holding money variables on money demand. However, most of them left out financial innovation which is one of the key factors influencing money demand. Additionally, they are just country specific studies and used time series data analysis technique. It is in this backdrop that a cross-country case study that investigates how financial innovation affects money demand function was carried out using the recent data and a different analysis technique which is panel data analysis. The objective of the study was to examine the effect of mobile financial innovation on money demand in the EAC. The study used secondary data for the period 2007 to 2020 and this data was obtained from the World Bank and International Monetary Fund. Both descriptive and inferential analyses were carried out. Levin-Lin-Chu test for panel unit root was done and all the study variables were found to be stationary at level. The results of balanced panel fixed effects regression analysis indicated that mobile money, ATMs, and real GDP were affecting money demand positively and their effects were also statistically significant. However, interest rate affected money demand negatively. Mobile money and ATMs were proxies for financial innovation whereas real GDP and interest rates were control variables. Therefore, it was observed that financial innovation has had a positive effect on money demand in the EAC. The findings of this study might be of great importance to monetary authorities and policy makers in the EAC. Future research studies can expand the period of study similar to this one and also increase the number of countries involved.

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Section: Literature Reviewmentioning

confidence: 99%

“…The demand for money at the global level has increased extensively [4]. This is because a higher demand for money is likely to result in huge economic growth [4].…”

Section: Introductionmentioning

confidence: 99%

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Effect of Financial Innovation on Money Demand in the East African Community

Kipchirchir

Kalio

Kibet

2023

AJEBA

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“…The economics of innovation technology will continue to take center stage in world development, particularly in the SSA where its emergence needs to be researched keenly as a way of understanding both its positive and negative impacts on lives and the development of operations pertaining to financial market activities. Several of such type of studies seem to be an ongoing venture in the continentfor example, Mlambo and Msosa (2020) recently pursued the effect of financial technology on money demand, with the case of selected African economies. Their study was done on some covert understanding of demand for digital payments being carried out in many markets in the SSA region, through the use of mobile-communication technologies.…”

Section: Sub-saharan Africa (Ssa) In Relation To Technology Innovationmentioning

confidence: 99%

Economics of Technology Innovation for Sustainable Growth: With Reference to Sub-Saharan Africa (SSA)

Jackson

2020

Encyclopedia of the UN Sustainable Development Goals

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The term innovation economy, also synonymous with economics of technology innovation, is modelled on the background of economic theory and places technology, innovation, entrepreneurship, and knowledge at the center of the model of economic growth (Luenendonk 2016). Disclaimer: Views expressed in this entry are those of the author and do not reflect any of the named institutions for which he is associated.

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Economics of Technology Innovation for Sustainable Growth: With Reference to Sub-Saharan Africa (SSA)

Jackson

2021

Encyclopedia of the UN Sustainable Development Goals

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The Effect of Financial Technology on Money Demand: Evidence from Selected African States

Cited by 3 publications

References 0 publications

Effect of Financial Innovation on Money Demand in the East African Community

Effect of Financial Innovation on Money Demand in the East African Community

Economics of Technology Innovation for Sustainable Growth: With Reference to Sub-Saharan Africa (SSA)

Economics of Technology Innovation for Sustainable Growth: With Reference to Sub-Saharan Africa (SSA)

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