Working Paper: NBER ID: w25007
Authors: David Yermack
Abstract: The FinTech sector has begun to grow rapidly in sub-Saharan Africa. I document far greater adoption of social media, digital currency, ride sharing, and other FinTech applications in countries with a common law legal heritage compared to those with a civil law system, suggesting that legal origin plays a critical role in setting the stage for growth through entrepreneurship in the developing world. The electrical, telecom, and Internet infrastructure required for FinTech has been built out more extensively in common law countries. Financial inclusion outcomes are also better in emerging markets that have a common law heritage.
Keywords: Fintech; Sub-Saharan Africa; Financial Inclusion; Legal Origin
JEL Codes: K15; O14; O17; O30; O55; R00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Legal origin (K19) | fintech growth (O16) |
| Legal origin (K19) | financial inclusion outcomes (G21) |
| Common law countries (K15) | better infrastructure (H54) |
| Common law countries (K15) | higher bank account ownership (G21) |
| Common law countries (K15) | higher savings (D14) |
| Common law countries (K15) | higher electronic debit card usage (E40) |
| Common law legal systems (K15) | better protection for investors (G18) |
| Better protection for investors (G18) | lower costs of capital (G31) |
| Lower costs of capital (G31) | fintech growth (O16) |
| Income levels (D31) | fintech growth (O16) |
| Educational attainment (I21) | fintech growth (O16) |