Faculty of Commerce, Law and Management (ETDs)
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Item The use of mobile money as driver for financial inclusion(University of the Witwatersrand, Johannesburg, 2024) Simelane, Syilina; Mondi, LumkileTechnology has contributed greatly to innovation. Since the advent of the internet and computers have increased the pace of innovation. Innovation has been moving at light speed. However, a large percentage of the population have not been able to enjoy the benefits of this growth in technology. The one invention though that has permeated all corners of the globe is the cellular phone (mobile phone). Cell phones have become ubiquitous. Their main function is to keep people connected. The cell phones’ other functionalities and compactness adds to the allure and necessity of the cell phone. Technology has also created an expectation in consumers. The expectation that they will receive products that will perfectly satisfy their needs. As noted in my research, I will review the methodology, setup, considerations and past successes of other countries in providing solutions that fit the needs of consumers of mobile banking. In countries such as India, Kenya and China. The purpose of this study is to determine how Mobile Network Operators can play an integral in the financial inclusion of low-income individuals through Mobile money applications. At current the availability, use and adoption of mobile money applications is low. This is due to several impediments that exist to low-income users. Some being awareness of the application, understanding on how to use the application and the benefits they may gain. The study reviews these impediments and offers suggestions on how to overcome these impediments. Mobile Network Operators (MNO) help improve access to mobile phones and in turn increase access to mobile banking applications. This research shows that increased use of mobile money application improves lives of those using these applications. It increases access to finance, creating more revenue for businesses using the application and Mobile Network Operators, that in turn increases the overall Gross Domestic Product (GDP). Through this research we find that Mobile Network Operators have a role to play in financial inclusion, however it will require a strategy that focuses on educating low- income individuals on available applications as well as creating solutions that are tailored for the needs of low-income individualsItem An evaluation of the effectiveness of financial inclusion programs in the South African financial sector(University of the Witwatersrand, Johannesburg, 2021) Korte, Maude; Pamacheche, RukudzoEmpirical literature argues that FI has a positive bearing on socio-economic aspects for developing economies, evidence of this is found in Sarma and Paris (2011), Ramakrishna and Trivedi (2018) and World Bank (2020). Accepting the positive impact, the correlation between FI and expected social benefits one needs to understand in the context of the society in which it exists for benefit maximisation. Amidži et al.(2014) explain that understanding the correlation in its societal context is critically important, as these supply and demand-side factors have significant impacts on FI's efficacy. The SA FI tactics to date have resulted in 80% of the population having access to bank accounts, however, dormancy on these accounts are estimated to be as high as 30% - 40% (FinMark, 2019). The central thought around a bank account led theory is that once a consumer has access to a bank account, the consumer is likely to use additional products and services (called secondary products in this context). How much of these secondary products and services have been taken up under the current tactic is unclear, as results are not published regularly. What is clear is that the shape of the FI landscape for SA has changed from many consumers being involuntary excluded (National Treasury Report, 2015) to many consumers volunteering exclusion. This can be seen in the dormancy ratio, a definitive indication of voluntary exclusion. Despite the landscape changes and the reported mismatch in supply and demand, SA FI strategy has remained unchanged since 2002. This paper interrogates the viability of the current FI strategy and argues for a new perspective of FI; it finds that SA will need to pivot from a supply-led focussed plan to a demand-led focused plan achieve the last mile of FI.Item Perceived impact of fintech on financial inclusion in South Africa(University of the Witwatersrand, Johannesburg, 2021) Runyowa, Leonard; Chakamera, ChengeteGlobally, financial inclusion has been recognised as a critical pillar to alleviate poverty, reduce inequality, and increase economic growth. As an emerging economy, South Africa is still facing challenges of poverty and inequality and is ranked one of the unequal countries in the world (World Bank, 2013). Financial inclusion by leveraging fintech has been identified as a critical enabler for delivering affordable financial services to under-served population segments (National Treasury, 2020). The primary purpose of this study is to determine the perceived impact of financial technology on financial inclusion in the South African context. The study's specific objectives are (i) to determine if the adoption and usage of fintech influences financial inclusion in South Africa; (ii) to determine if fintech can influence financial inclusion barriers and (iii) to determine if awareness of the benefits and risks associated with fintech influence the adoption and usageof fintech. The study used a quantitative research strategy with a cross-sectional or survey design. An online self-completion questionnaire was used as a data collection instrument and non-probability sampling with convenience sampling method to select the respondents. One hundred twenty-five respondents completed the online survey, and data were analysed using descriptive statistics, correlation, and regression analysis. The findings indicate that fintech adoption and usage has a positive influence on financial inclusion. The study also found that fintech influences financial inclusion barriers like distance to the nearest branch, transport costs, transaction costs, and lack of proper documentation. Consumers who use fintech products and services no longer perceive these barriers as a hindrance to financial access. Lastly, it was also found that awareness of the benefits associated with fintech influences fintech adoption and usage. In contrast, awareness of the risks associated with fintech does not influence fintech adoption and use among the respondents. This study will contribute to the fewer studies that have looked at the impact of fintech on financial inclusion in the South African context. The study can help the government and financial institutions understand the impact of fintech on financial inclusion and improve the current strategies implemented to increase financial inclusion in South AfricaItem Digitalization of banking services and financial inclusion in Botswana(University of the Witwatersrand, Johannesburg, 2023) Mpowe, Emmanuel; Odei- Mensah, JonesThe purpose of the study was to evaluate the level of digitalization of banking or financial services in Botswana. The study also sought to understand the association between digitalization and financial inclusion Furthermore, the research also studied the association of macro level determinants of financial inclusion such as GDP per capita and employment to adult population with financial inclusion. The study used secondary data collected mainly from the reserve bank of Botswana’s reports published on their website, Central Statistics Office and annual report of a selected commercial banks. Annual spending on ICT by commercial banks was used as a proxy for digitalization. The study used time series data from 2006 to 2020. Regression and correlation techniques were performed on the selected variables with financial inclusion as a dependent variable. The result from the analysis suggested that there is a significant positive association between ICT spend or digitalization of banking services and financial inclusion. This findings were in support of the hypothesis formulated from the existing literature which also suggested that digital financial services are more likely to increase the level of financial inclusion. The study also evaluated the impact of GDP and employment rate on financial inclusion. The findings suggested that both variables have a positive correlation with financial inclusion.Item Financial inclusion through digital payments in South Africa(University of the Witwatersrand, Johannesburg, 2023) Tshishonga, Aluwani Peter; Ndayizigamiye, PatrickOne of the enablers of financial inclusion is access to payment services and digital payments have been proven in other countries to be one of the enablers of financial inclusion. Cash payments are prevalent in many communities in the country However, those using cash are not included in formal financial services and are not able to get services such as credit, insurance and other financial services products. This study sought to identify the challenges that should be addressed in order to use digital payments as enablers of financial inclusion in South Africa. It also sought to identify the solutions or frameworks that could be used to address these challenges. The Actor-Network Theory was used to identify the actors in the digital payments ecosystem and the challenges they face. The research findings show that the South African economy can be referred to as a “dual economy”. The rural economy relies heavily on cash while the urban economy uses formal banking services, which include digital payments. Amongst the challenges affecting the adoption of digital payments are the immediacy of cash and the perceived low cost of cash, the low acceptance of digital payments by merchants’ infrastructure and, in some instances, those who are willing to pay using digital means are charged more to cover the costs merchants incur when accepting digital payments. A further challenge is the rate of digital literacy in the country and the lack of trust in the digital payments ecosystem. The cost of date in South Africa limits access to internet connectivity which is required to make digital payments. There is a lack of interoperable solutions in the market whereby customers can move from one channel to another with ease, for example, by using a mobile money wallet in the same way a bank account can be used. Lastly, the lack of privacy in transactions was also identified as a challenge. While there may be several solutions for these challenges, this research established the following potential solution, namely, the creation of a new industry body that includes all actors in the digital payments ecosystem. Mobile network operators, financial technology companies and retailers, amongst others, need to participate in this new industry body in order to help address the identified challenges. The new industry body must also assume the task of increasing digital literacy in the country and improving the infrastructure required to support digital paymentItem Studies on financial inclusion in Africa(2022) Poku, KwasiFinancial inclusion has recently been an important concern for policy makers and researchers due to its relevance to the financial system, poverty reduction and the growth of economies. In spite of the enormous policy relevance of financial inclusion, empirical evidence on this nexus suffers many limitations in findings and measurement, particularly the measurement of financial inclusion and financial development. Significantly, the context of Africa where financial exclusion is more pronounced remains relatively less explored in the financial inclusion-financial stability nexus, a void this study intends to fill. Using Africa as a case, this thesis consists of four self–contained chapters with each investigating a critical gap relying on several advanced econometric techniques. In the first essay, we investigate the influence of financial inclusion on financial development in Africa using data from 22 African countries over a 12-year period, from 2007 to 2018. We investigate this relationship using the Generalized Method of Moments (GMM) approach to panel data. We find financial inclusion, measured with the financial inclusion index, to be significant and positively related to financial development, measured with the financial development index. However, employing single measures of financial development as dependent variables, we find financial inclusion to exert an insignificant effect on financial development. In conclusion, using indexes to measure financial inclusion and financial development provide a more comprehensive measure which provides robust findings that can effectively assist policy makers in designing initiatives and strategies. In the second essay, we examine the indirect effect of financial inclusion in the relationship between financial development and income inequality in Africa using the three-stage least squares (3SLS) approach with data that covers a 12-year period, from 2004 to 2015. We find financial development to indirectly exert a negative effect on income inequality in Africa. However, iv financial development eventually reduces income inequality as financial services are extended to the marginalized as the sector further develops. The main conclusion is that, financial inclusion is essential in the achievement of income equality in Africa. The third essay investigates the impact of financial inclusion on stability in the African banking system. We employ the quantile regression approach to examine this relationship with data from 22-African countries over a 12-year period, from 2004 to 2015. We provide comprehensive evidence that greater financial inclusion enhances the stability of the African banking system. Although financial inclusion enhances the stability of banks at all levels of stability, our finding shows that, the impact of financial inclusion on stability is more pronounced in highly stable banking systems. Nonetheless, financial inclusion also enhances the stability of banks in relatively less stable banking systems. We conclude therefore that, with a more inclusive financial sector, banks enjoy greater stability. In the final essay, we investigate the non-linear relationship between financial inclusion and economic growth in Africa, with investment as the mediating/threshold variable. We employ the Hansen’s sample splitting approach to examine this relationship. We provide evidence that, investment does not only significantly influence the relationship between financial inclusion and economic growth, but also, the level of investment in the country is important in determining the sign and magnitude of this effect. Specifically, we find that, below the threshold level of investment, financial inclusion exerts a negative and significant influence on economic growth whereas above the threshold level of investment, financial inclusion affects economic growth positively and significantly. We conclude that, for financial inclusion to affect economic growth positively, the level of investment in the country must be equal to or exceed a threshold level of investment identified in this study.Item Financial literacy as a determinant of financial inclusion in Tanzania(2022) Mmari, Peter JosephFinancial inclusion is considered to be an effective tool to reduce access and usage barriers in the banking sector. Despite its effectiveness, its benefits have not been fully realized by Tanzanians due to both supply and demand side limiting factors. Tanzania records a high level of financial exclusion in the banking sub-sector because 83 per cent of her adult population is un-banked. The high level of exclusion in banking though poses challenges to Tanzanians it is also a global concern and for that it continues to attract more research for effective interventions, (Demirgüç-Kunt, Klapper, Singer, Ansar, & Hess, 2018). The empirical literature on financial inclusion suggests that financial exclusion in the banking sector is explained by various demand-side factors, including the high level of financial illiteracy in societies, (Chikalipah, 2017). In the context of Tanzania, information regarding the role of financial literacy in influencing financial inclusion in the banking sector is limited. In addition, the moderating effect of demographic variables on the ability of financial literacy to influence financial inclusion remains to be unknown and hence the need for this research. In efforts to address this gap, this study uses the theories of Planned Behaviour (TPB), (Ajzen, 1991) and the Technology Acceptance Model (TAM),(Davis, 1989; Venkatesh & Davis, 2000) to develop a measurement model for financial literacy and digital financial literacy as constructs hypothesized to influence individual’s financial inclusion. Following a positivist and quantitative research approach, this study employs the Structural Equation Modelling technique by using Smart Partial Least Square 3, software to examine the causal relationship between financial literacy and digital financial literacy with financial inclusion. Data for the study were collected through a cross-sectional survey conducted on a sample of 440 respondents from eight districts in Tanzania.Item The relationship between financial inclusion and economic development in developing countries(2020) Hlanti, AndileFinancial inclusion in developing countries has not been explored to the same extent as for developed countries, and there is limited knowledge of what drives financial inclusion in developing countries. This paper looks at the relationship between financial inclusion and economic development in developing countries using an Index of Financial Inclusion (IFI) and three economic development parameters; GDP (PPP), GDP Per Capita and the Human Development Index (HDI). The study found a positive relationship between financial inclusion and economic development in developing countries. This paper analyses a combination of factors associated with the Index of Financial Inclusion by running 20 regression sets of transformed IFIs on two variable sets: aspects of the banking sector and socio-economic variables. The analysis also includes physical infrastructure factors in each regression, namely: transport infrastructure, mobile cellular subscriptions, internet connectivity and fixed telephone infrastructure. The study found that infrastructure requirements that are critical for enhancing financial inclusion in developing countries include: transport infrastructure, mobile cellular subscriptions and internet connectivity. The study further found that socioeconomic factors, such as access to credit, employment opportunities and adult literacy, are also important in ensuring financial inclusion. Certain banking variables hinder financial inclusion, like high-interest rates, while an increase in foreign assets is positively associated with financial inclusion in developing countries. This research ultimately contributes to the body of knowledge regarding financial inclusion in developing countries.Item Alternative finance: definition, sources and implications for the financial sector(2020) Chabaya, BothwellThe research will seek to highlight the sources of alternative finance and in the same vain highlight the structural problems of ‘’tainted intermediation’’ brought about as a result of the rise of Alternative Finance. It seeks to introduce a framework for regulatory thinking and approach in response to the emergence of alternative finance especially given that it is a new and developing phenomenon. The research will assist with further studies in the area of financial inclusion in the emerging economies as a result of alternative finance as well as the role and impact of alternative finance in the democratization of the financial sector. The study seeks to contribute in highlighting the main sources of alternative finances from the different types offered in the financial sector. It goes further to explore whether these sources of alternative finance result in reintermediation or disintermediation 15 answering the questions of who and what the intermediator is because of alternative finance. This exploration would highlight the problem of ‘’tainted intermediary’’, as well as lead to an introduction of how regulators and policymakers should frame their thought process and approach in the development of regulation governing the operations of new and alternative finance. Because alternative finance is a new and developing phenomenon the study will assist in further study of the area by the academic community from insights provided.