Banking on mobiles. The role of digital epidemic effects and mobile money regulation in accelerating the uptake of financial services

Despite the accelerated mobile money adoption in emerging countries, financial inclusion levels remain well below the developed world, especially when advanced financial inclusion is considered. We argue that the adoption of mobile money can constitute a facilitator for the use of more sophisticated financial services. However, mobile money regulations, mobile connectivity and institutional development are crucial to advance financial inclusion beyond access to current accounts towards a wider range of financial products. We analyze the direct role of mobile money technology, its associated epidemic effects, and the institutional context, in embracing formal finance, and its indirect role in enhancing financial inclusion intensity. Using Structural Equation Models (SEM) we examine 60,209 observations from 66 emerging countries from different continents. We find that mobile money, mobile regulation, mobile connectivity, and strong institutions are precursors of financial inclusion, and positively influence financial intensity. We also find that financial intensity is enhanced when digital financial services are at use.