Mobile Telephony, Financial Inclusion and Inclusive Growth

ABSTRACT

The paper employs the multipurpose nature of mobile telephony to investigate its welfare implications using a large sample of households in Ghana. We use seemingly unrelated probit and instrumental variable procedure to test for two related issues: First, we investigate whether mobile telephony promotes pro-poor development by helping households to efficiently allocate consumption and navigate out of poverty. Second, we analyze whether access to a broad array of financial services enhances the capacity of households to live worthwhile lives. The results show that mobile penetration and financial inclusion significantly reduce the probability of a household becoming poor and increase per capita household consumption of food and non-food items. Our results show that the welfare benefits of mobile telephony and financial inclusion are not more pronounced in female-headed households. These insights serve as useful guide for government and other stakeholders who are looking for avenues to improve livelihoods.

KEYWORDS:

• Mobile telephony
• financial inclusion
• inclusive growth
• Ghana
• seemingly unrelated probit

Acknowledgement

Joshua Y. Abor and Mohammed Amidu would like to thank the DFID-ESRC for funding this research which is part of DFID-ESRC Research Project Ref ES/NO13344/1: “Delivering Inclusive Financial Development & Growth”.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. The exchange rate is 4.2GHC/USD.

2. This is international poverty line set by the World Bank in 2015.

3. In this study, ‘POOR’, which measures poverty status is a categorical variable, which equals 1 if the household is non-poor and 0 if the household is poor. Therefore, if a household moves from the category poor to the non-poor bracket, that household is said to have exited poverty.

Additional information

Funding

This work was supported by the DFID-ESRC [ES/NO13344/1]; DFID-ESRC [Ref ES/NO13344/1].