Fintech, foreign bank presence and inclusive finance in Africa: Using a quantile regression approach

Abstract

Africa is one of the continents with the least inclusive finance. However, with increasing use of mobile phones for financial services or financial technology (Fintech), there are improved opportunities to ‘bank the unbanked”. Also, there is a significant increase in both the presence of foreign banks and Fintech usage. Hence, we examine the moderating role of foreign bank presence on the Fintech-inclusive finance nexus over the period, 2000–2018. The results show that foreign bank presence does not directly affect inclusive finance, but increases the link between Fintech and inclusive finance. We recommend that African countries need to provide the conducive environment improving the use of Fintech.

Keywords:

• Fintech
• Foreign bank presence
• Inclusive finance
• Quantile regression
• Africa

JEL Classification:

• 015
• D31
• D63
• E44
• 043

PUBLIC INTEREST STATEMENT

The paper examined how ICT can be used to improve the access of financial products to all the populace (Fintech) in an effective and efficient manner. We looked at how the influx of foreign banks into Africa can improve the access of financial products to all the populace. Our empirical results suggested that indeed, using ICT such as using mobile phone to send money and paying bills can help the poor, those living in the rural and other stakeholders to get access to financial products efficiently and effectively. However, we found that the inflow of foreign banks into Africa form synergies with Fintech to enhance efficient and effective access to financial products.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data Availability Statement

The study published its data in Mendeley Data Repository and can be found from Iddrisu, khadijah; Abor, Joshua; Banyen, Kannyiri (2022), “Fintech, Foreign Bank Presence and Inclusive Finance”, Mendeley Data, V1, doi: 10.17632/dshngs52gs.1

Notes

1. Anarfo et al. (2020) identified that inclusive finance index gave more robust findings than that of single indicator in the context of Africa

2. Liberalisation of financial markets to follow liberalization of goods market

3. Algeria, Angola, Burkina Faso, Cameroon, Egypt, Ghana, Kenya, Libya, Mali, Malawi, Mauritania, Mauritius, Mozambique, Morocco, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Sudan, Tanzania, Tunisia, Togo, Uganda and Zambia.

4. broadening spreads such as decrease in deposit rates as against average banking lending rates.

Additional information

Funding

The authors have no funding to report.

Notes on contributors

Khadijah Iddrisu

Khadijah Iddris’ is a PhD candidate of Simon Diedong Dombo University of Business and Integrated Development Studies. She holds an MPhil in Finance from University of Professional Studies, Accra, a BSc. Accounting from the University of Development studies and also an Executive Mini MBA in corporate governance and financial management both from Accra Business School.This paper is part of Khadijah Iddrisu’s PhD Business Administration (Finance) research. The research reported in this paper is related to UN’s Agenda 2030 and World Bank project on both inclusive finance and Fintech.

Joshua Yindenaba Abor

Joshua Yindenaba Abor is a Professor of Finance, financial economist and qualified accountant. He is experienced in development finance and economics research. He holds a PhD in Finance from Stellenbosch University, a Fellow of Association of Certified Accountants, UK. He is a former Dean of the University of Ghana, Business School.

Kannyiri T. Banyen

Kannyiri T. Banyen is a senior lecturer in the Department of Finance at the Simon Diedong Dombo University of Business and Integrated Development Studies and a researcher at African growth institute, South Africa. He holds PhD in Business Administration specializing in Development Finance from the University of Cape Town and an MPhil in Finance from University of Ghana.