PDF_logo Impact of Mobile Financial Services on Financial Inclusion in Bangladesh

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Impact of Mobile Financial Services on Financial Inclusion in Bangladesh

Paper No:52

Author:Nahid Akhter and M. A. Baqui Khalily



Competition in financial markets and the drive for higher market share are the major drivers in expansion of financial services, which has higher impacts on growth and financial development in countries like Bangladesh. Innovation in finance, either as a new product or a new process, has contributed to such competition and expansion of financial services. Technology and innovation has positive impacts on production and efficiency, and in turn, to growth at the macro level and institutional performance at the firm level.  Two key factors are major determinants of acceptance of technology, as perceived by users: perceived usefulness and ease of use. Positive perception of usefulness and ease of use is influenced by low transaction cost, ensures security, improves convenience and minimize transaction risk for the users of financial services. Mobile technology is one of the financial innovations, which has multi-dimensional impacts. In technical terms, it improves efficiency and financial inclusion. The paper investigates the impacts of mobile financial services on financial inclusion in Bangladesh. The outcome shows that the need for mobile financial services is beyond any question. Mobile financial services have brought major changes in financial products and institutional structure. It can reach excluded low-income and micro and small entrepreneurs, which will have wider impact including growth and poverty alleviation. Our analysis showed positive role of mobile banking on financial inclusion. The findings do suggest that the role of banks and MFIs to expand services in inaccessible areas can be effective if they are complemented by mobile money and  appropriate regulatory framework.

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