On financial innovation in developing countries: The determinants of mobile banking and financial development in Africa

This study addresses the question of financial innovation in developing countries by focusing on the determinants of mobile banking development in Africa. Data on mobile banking across countries is partially constructed by the author, to which is applied panel data and cross-sectional econometric technics, to investigate the determinants of mobile banking development. Statistical analysis reveals that there is a positive link between the different proxies of mobile banking and an indicator of mobile banking development using the principal component analysis technique is constructed. Overall, the estimation of the four models highlights the following determinants: human capital development, credible monetary policy, infrastructure development, remittances facilitation, urbanization, trade openness and the facilitation of access to domestic credit from the banking sector. Also, the results of our robustness check are uncontroversial. A general recommendation to African governments is that they should pursue good performance in the light of the determinants highlighted above by implementing specific and well conditioned economic policies.