Abstract:
The mobile money transfer service is an aspect of a broader concept emerging in
the electronic payment and banking industry referred to as Mobile Money. Economic
growth is measured in nominal terms. This study sought to establish the effect of mobile
money transfers on economic growth in Kenya. The objective of the study was to establish
the effect of mobile money transfer service on economic growth in Kenya. This phenomenon
is keenly being achieved through Mobile Money Transfer Services initiative already taking
significant and positive direction in Kenya. This study employed explanatory research design
which focuses on why questions by developing casual explanations. An explanatory survey
design shows how variables relate to each other. It aimed at establishing a cause and effect
between variables. The dependent variable was economic growth for the year 2007 to 2015
(7 years or 28 quarters). The independent variables were mobile money transfer agents,
mobile money transfer customer enrolments, mobile money transfer transaction frequency
and mobile money transfer deposit value. The choice of the years was because of data
availability. The target population accessible was 7 years. The sample size of the study was 7
years. This implied that a census methodology was used because of the mobile money
transfer existence was short. The study used secondary data sources to gather information
relevant in reaching the research objectives. The secondary data was collected from the CBK
and the (KNBS) Kenya National Bureau of Statistics reports. The study’s data collection
source was justified by the fact that data on mobile money transfer agents, mobile money
transfer customer enrolments, mobile money transfer transaction frequency and mobile
money transfer deposit value were available in the CBK while the same works hand in hand
with KNBS in making such statistics and estimation. The scope of the study determined the
effect of mobile money transfer on economic growth. The geographical scope of the study
was Kenya. Both regression analysis and time series analysis were used to analyze the data.
There was no Co-integration between economic growth and mobile money agents, customers,
frequency of transfer as well as the value of money transferred. VAR modeling impulse
response revealed that number of agents, customers and frequency of transactions have a long
run positive shock on economic growth while both interest rate and exchange rate impacts it
negatively. There is need to intensify the need for adaption of mobile money transfer services
among those who have not adapted them. The study recommends that the policy makers take
mobile money transfer into consideration when drafting policies. This was because of the
indirect relationship of mobile money transfer to economic growth through the provision of
job opportunities, increased financial deepening and financial inclusion. Further, the study
recommends that the government set up mechanism and framework to support innovation and
offer substantive regulation in the mobile money transfer market to safeguard and offer
security to the service users.