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Regionalized liquidity: A cross-country analysis of mobile money deployment and inflation in developing economies

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  • Qiu, Christina M.
Abstract
Mobile money has been hailed as a serious innovation in the pursuit of financial inclusion and poverty alleviation; however, its macroeconomic effect is not fully understood. This study presents a regional theory of inflation and argues that limited market integration contributes to mobile money’s inflationary effects. Household survey data from Kenya confirms increased use of mobile money after village- and supra-village-level shocks due to risk-sharing between liquidity-flexible and liquidity-constrained regions. A difference-in-differences empirical assessment indicates that mobile money deployment increases national consumer price indices. Findings support that the power to distribute equals the power to generate money supply in developing countries.

Suggested Citation

  • Qiu, Christina M., 2022. "Regionalized liquidity: A cross-country analysis of mobile money deployment and inflation in developing economies," World Development, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:wdevel:v:152:y:2022:i:c:s0305750x2100396x
    DOI: 10.1016/j.worlddev.2021.105781
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    Cited by:

    1. George Kosgei Kiptum, 2022. "Relationship between Kenya’s economic growth and inflation," SN Business & Economics, Springer, vol. 2(12), pages 1-16, December.

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    More about this item

    Keywords

    Money supply; Quantity theory of money; Food price; Smallholder agriculture; Mobile money; Financial inclusion;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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