SOAS University of London

Loughborough University - New major research project to look at inclusive finance in Africa

9 June 2016

Loughborough University academics Christopher Green, Professor of Economics and Finance, and Ahmad Ahmad, Lecturer in Macroeconomics, will be leading two of the research themes.

The first theme involves studies of the modalities through which technical innovations may improve access to financial services in Africa, concentrating in particular on developments and possibilities in ‘mobile money’. The use of mobile phones in financial services was pioneered largely in Kenya, and the new research will investigate how mobile money is used in West Africa in comparison with East Africa, and the ways in which mobile phones and related technologies offer alternatives to conventional banking in enabling households to gain access to financial services.

Dr Ahmad said of the project:

"The explosive growth in the use of mobile phones to access financial services has been an exciting development in certain African countries. This project will aim to shed light on the wider possibilities for using mobile phones and related technologies to promote financial inclusion throughout Africa."

The second research theme concerns bank integration in East Africa. There is ongoing financial integration among East African countries which is generally recognised to help promote economic growth in the region. However, policy makers are increasingly concerned about the issue of how whether integration can fuel contagion of financial crises as funds flow through the banking systems and across borders. Researchers will empirically examine the degree to which the banking systems in East African countries have become interconnected, how far interbank networks contribute to the transmission of contagion in this region, and consider possible policy responses.

Professor Green said:

"Contagion is an established concern for financial systems in the major industrial countries, but financial integration is only just beginning in Africa. This research will aim to document the extent of financial integration in East Africa and draw out lessons so that Africa may avoid some of the problems faced elsewhere, especially during and after the 2007-08 financial crisis."