Financial development and economic growth – the role of mobile money: empirical evidence from Sub-Saharan Africa and a comparative study of Kenya and Uganda

The relationship between financial development and economic growth is well established in the finance-growth literature, which is predicated on the existence of a well-functioning financial system that underscores the complementarity between financial institutions and financial markets. Financial inclusion, defined as the participation of individuals in the formal financial system, is a critical component of financial development and, by extension, the finance-growth nexus. In many developing countries, financial exclusion remains a significant challenge, with a substantial proportion of the population lacking access to formal financial services. However, the advent of mobile money, which achieved notable success in Kenya following its introduction in 2007, has provided a considerable boost to financial inclusion across the Sub-Saharan African (SSA) region, home to the largest concentration of low-income countries globally. Empirical evidence indicates that mobile money has enhanced financial inclusion by expanding access to financial services, thereby contributing to financial development through improved resource mobilization, increased savings, and broader participation in the financial sector. Notably, SSA continues to lead globally in mobile money adoption and usage. This thesis examines the role of mobile money, an important driver of financial inclusion, in shaping the finance-growth nexus in Sub-Saharan Africa (SSA). It employs a broad measure of financial development that incorporates mobile money, financial institutions, and financial markets. The study contributes to the literature by providing empirical evidence from 17 SSA countries, selected based on data availability, covering the period from 2015 to 2022, a timeframe during which mobile money was widely adopted across the region. To gain deeper insights into the impact of enhanced financial inclusion on the finance-growth relationship in developing economies, Kenya and Uganda, two of the leading adopters of mobile money, are analyzed as case ...