Working Paper: CEPR ID: DP18124
Authors: Markus Brunnermeier; Nicola Limodio; Lorenzo Spadavecchia
Abstract: This paper explores the tradeoff between competition and financial inclusion given by the vertical integration between mobile network and money operators. Joining novel data on mobile money fees built through the WayBack machine, with sources on network coverage and financials, we examine the staggering across African operators and countries of platform interoperability – a policy that promotes transactions and competition across mobile money operators. Our findings show that interoperability lowers mobile money fees and reduces network coverage and mobile towers, especially in rural and poor districts. Interoperability also results in a decline in various survey metrics of financial inclusion.
Keywords: mobile money; interoperability; financial inclusion
JEL Codes: E42; L14; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mobile money interoperability (E42) | mobile money fees (E42) |
| mobile money interoperability (E42) | mobile money fees for small payments (E42) |
| mobile money interoperability (E42) | network coverage (L96) |
| decline in network coverage (D85) | access to emergency funds and remittances (F24) |
| mobile money interoperability (E42) | mobile money transactions and users (E40) |
| mobile money interoperability (E42) | infrastructure investment by mobile network companies (H54) |
| negative impact on infrastructure investment (H54) | reduced number of towers and overall network provision (L96) |