Working Paper: NBER ID: w31696
Authors: Markus K. Brunnermeier; Nicola Limodio; Lorenzo Spadavecchia
Abstract: This paper investigates the tradeoff between competition and financial inclusion resulting from the vertical integration between mobile network and money operators. Joining newly assembled data on mobile money fees 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 results show that interoperability benefits users by lowering mobile money fees and their dispersion across operators. However, these positive effects are offset by a decrease in mobile towers and network coverage, especially in rural and poor districts, which, in turn, leads to a lower financial inclusion. We note that combining interoperability with subsidies for rural telecommunications delivers lower fees without hurting coverage.
Keywords: mobile money; interoperability; financial inclusion; competition
JEL Codes: E4; O16; O30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower mobile money fees (E42) | increase in financial inclusion (O16) |
| interoperability (L15) | decrease in financial inclusion (F65) |
| interoperability (L15) | lower mobile money fees (E42) |
| interoperability (L15) | decrease in network coverage (D85) |