Mobile money and entrepreneurship in East Africa : The mediating roles of digital savings and access to digital credit

Purpose This study examines the comparative link between mobile money and entrepreneurship in East Africa. Apart from analysing our data to examine locational, gender and age heterogeneities in the mobile money-entrepreneurship nexus, we explore the potential roles of digital savings and access to digital credit in serving as transmission channels in the link between mobile money adoption and entrepreneurship.Design/Methodology/Approach This paper uses nationally representative samples from Kenya, Tanzania and Uganda which were extracted from the fifth wave of the InterMedia Financial Inclusion Insights Program. We employ a suite of quasi-experimental microeconometric techniques—standard instrumental variable estimation, Lewbel two-stage least squares and propensity score matching.Finding Overall, our preferred endogeneity-corrected result suggests that adopters of mobile money are 24.4 percentage points more likely to engage in entrepreneurship. This result is robust to alternative ways of conceptualising mobile money adoption and different methods used in resolving endogeneity. The association between mobile money and entrepreneurship is stronger in Kenya compared to Uganda and not significant in Tanzania. The significant positive association between mobile money and entrepreneurship is observed among women and rural residents and not for their male and urban-located counterparts. Mobile money significantly enhances entrepreneurship among the youth and adults but not the elderly. Digital savings and access to digital credit serve as important channels through which FinTech adoption influences entrepreneurship