When Tech, Money, and Politics Collide: Understanding the Evolution of Money

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Abstract

In this paper, I use cross-country regressions to examine global adoption patterns of digital payments. As of 2023, there were ~5.62 bn fintech users, with 4.4 bn in digital payments. Transaction values also surged to ~8 Tn USD in 2022. I focus on mobile money, a dominant subset of digital payments. Interestingly, mobile money adoption rates vary across countries, with LIC, especially in SSA and in MENA, leading in mobile money account prevalence. This is contrary to traditional financial market dynamics. I argue this trend is influenced by factors such as banking infrastructure, the unbanked population percentage, and the degree of state control over financial and telecom sectors. In environments where traditional banking services are lacking and government intervention is limited, the private sector has innovatively filled the gap, fostering mobile money adoption. This research has broader implications for the political economy of electronic money as well as for the increasing use of electronic money and the impact that has on monetary policy.

Author

• Ghita Chraibi, University of Virginia