The impact of Mobile Money innovation in Ghana on bank profitability
DOI:
https://doi.org/10.47963/jobed.v12i.249Keywords:
Bank profitability, performance, mobile money, Financial innovation, GhanaAbstract
The study investigated the bank specific, industry and macroeconomic factors that impact the profitability of banks from a developing country perspective. The differentiator for this paper is the inclusion of mobile money floats as a factor that influence bank profitability in a mobile money driven financial system. Using panel data techniques, the study found that bank-related factors that drive bank profitability are operating expense ratio, capitalisation, and bank size. All macroeconomic variables included in the study are also important in explaining bank profitability and so is market concentration and regulation. The study however, revealed that mobile money floats does not influence bank profitability significantly, however, bank size complements and moderates the relationship between mobile money and bank profitability positively. The study recommend that smaller banks should invest more in information technology to attract more mobile money floats to improve upon profitability and consequently financial inclusion and economic development.
Downloads
References
Ally, Z. (2014). Determinants of banks’ profitability in a developing economy: empirical evidence from Tanzania. European Journal of Business and Management, 6(31), 2222–2839.
Alshatti, A. S. (2016). Determinants of banks’ profitability - The case of Jordan. Investment Management and Financial Innovations, 13(1), 84–91. https://doi.org/10.21511/imfi.13(1).2016.08
Anarfi, D., Abakah, E. J. A., & Boateng, E. (2016). Determinants of bank profitability in Ghana: new evidence. Asian Journal of Finance & Accounting, 8(2), 194. https://doi.org/10.5296/ajfa.v8i2.10274
Athanasoglou, P., Delis, M., & Staikouras, C. (2008). Determinants of bank profitability in the South Eastern European Region (No. MPRA Paper No. 10274). Munich. Retrieved from https://mpra.ub.uni-muenchen.de/10274/
Athanasoglou, P. P., Brissimis, S. N., & Delis, M. D. (2005). Bank-specific, industry-specific and macroeconomic determinants of bank profitability (No. MPRA Paper No. 32026). Munich. Retrieved from https://mpra.ub.uni-muenchen.de/32026/
Baltagi, B. H. (Ed.). (2015). The Oxford handbook of panel data. Oxford Handbooks.
Baltagi, B. (2008). Econometric analysis of panel data. John Wiley & Sons.
Boadi, I. (2015). Profitability determinants of the Ghanaian banking sector in ongoing wave of consolidation. International Journal of Business and Management, 10(12), 1. https://doi.org/10.5539/ijbm.v10n12p1
BOG, PSD 2017. Payment Systems Department Annual Report 2016, Bank of Ghana.
Bold, C., Porteous, D. and Rotman, S. (2012). Social cash transfers and financial inclusion: Evidence from four countries. Consultative Group for Assisting the Poor (CGAP), February, 1-20.
Bourke P (1989). Concentration and other determinants of bank profitability in Europe, North America and Australia, Journal of Banking and Finance 13 (1989) 6%79. North-Holland
Duraj, B., & Moci, E. (2015). Factors Influencing the Bank Profitability - Empirical Evidence from Albania. Asian Economic and Financial Review, 5(3), 483–494. https://doi.org/10.18488/journal.aefr/2015.5.3/102.3.483.494
Ehrbeck, T., Pickens, M. and Tarazi, M. (2012). Financially Inclusive Ecosystems: The roles of government today. CGAP, February.1-11.
GSMA. 2013. The Mobile Economy 2013, ATKearney. http://gsma.com/newsroom/wp- content/
uploads/2013/12/GSMA-Mobile-Economy-2013.pdf
Hannan , Timothy H . ( 1979a ) ' Expense - preference behaviour in banking – a reexamination ' , Journal of Political Economy , 87 , August , 891 - 895 .
Hauner, D. 2005. Explaining effi ciency differences among large German and Austrian Banks, Applied Economics 37(9): 969–980.
Herdhayinta, H., & Supriyono, R. A. (2019). Determinants of bank profitability: the case of the Regional Development Bank (BPD Bank) in Indonesia. Journal of Indonesian Economy and Business, 34(1), 1. https://doi.org/10.22146/jieb.17331
Jenkins, B. 2008. Developing mobile money ecosystems, IFC, World Bank and Harvard Kennedy School of Government. http://www.hks.harvard.edu/m- rcbg/CSRI/publications/report_30_MOBILEMONEY.pdf
Ken Holden & Magdi El-Bannany (2004) Investment in information technology systems and other determinants of bank profitability in the UK, Applied Financial Economics, 14:5, 361-365,
Krakah, A. K., Ameyaw, A., & Sällberg, H. (2010). The determinants of bank’s profitability in Ghana, the case of Merchant Bank Ghana Limited (MBG) and Ghana Commercial Bank (GCB) (Blekinge Institute of Technology). Blekinge Institute of Technology. Retrieved from http://www.diva-portal.org/smash/get/diva2:829263/FULLTEXT01
Kutsienyo, L. (2011). The Determinant of profitability of banks in Ghana (Kwame Nkrumah University of Science and Technology). Kwame Nkrumah University of Science and Technology. Retrieved from http://ir.knust.edu.gh/bitstream/123456789/4220/1/Lawrence thesis.pdf
Mattern, M (2017). How Ghana Became One of Africa’s Top Mobile Money Markets.
https://www.cgap.org/blog/how-ghana-became-one-africas-top-mobile-money-markets
Obamuyi, T. M. (2013). Determinants of banks’ profitability in a developing economy: evidence from Nigeria. Organizations and Markets in Emerging Economies, 4(2), 97–111. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&profile=ehost&scope=site&authtype=crawler&jrnl=20294581&AN=93247337&h=YC1VQ8hPUtxprL5rR3WDUG0m56QptBf8zjyJveriI/8CIXu9yQk1J/Y/BBg+rOcozkFNsZA79bAd/7C5yiO9aw==&crl=c
Pelletier, A., Khavul, S., Estrin, S. (2020). Innovations in emerging markets: the case of mobile money. Industrial and Corporate Change, 2020, Vol. 29, No. 2, 395–421
Porteous, D. (2006). The enabling environment of mobile banking in Africa. London: Department for
International Development (DFID) Retrieved September 5, 2012 from http://www.
gsma.com/mobilefordevelopment/wp -content/uploads/2012
Petria, N., Capraru, B., & Ihnatov, I. (2015). Determinants of banks’ profitability: evidence from EU 27 banking systems. Procedia Economics and Finance, 20(15), 518–524. https://doi.org/10.1016/s2212-5671(15)00104-5
Rahman, M. M., Hamid, K., Khan, A. M. (2015). Determinants of bank profitability: Empirical evidence
from Bangladesh. International Journal of Business and Management; 10, (8), 135-150.
Staikouras, C. K., & Wood, G. E. (2011). The determinants of European bank profitability. International Business & Economics Research Journal (IBER), 3(6), 57–68. https://doi.org/10.19030/iber.v3i6.3699
Sufian, F., & Habibullah, M. S. (2009). Determinants of bank profitability in a developing economy: Empirical evidence from Bangladesh. Journal of Business Economics and Management, 10(3), 207–217. https://doi.org/10.3846/1611-1699.2009.10.207-217
Wilson U Ani, Cosmas O Odo & Ezeudu Ikenna (2014) The impact of information technology on bank
profitability in Nigeria, African Journal of Science, Technology, Innovation and Development, 6:1,
-37
Wooldridge, J. M. (2013). Introductory Econometrics: A modern approach. In Applied Discrete-Choice Modelling (5th Edition). Mason, OH, USA: Cengage Learning. https://doi.org/10.4324/9781351140768-8
Zhang, C. (2011). Determinants of bank profitability: evidence from the U.S banking sector (Simon Fraser University). Simon Fraser University. Retrieved from https://summit.sfu.ca/item/18347
Downloads
Published
Versions
- 2024-10-17 (3)
- 2024-10-17 (2)
- 2024-10-01 (1)
How to Cite
Issue
Section
License
Copyright (c) 2024 Philip Ayagre
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
