Does mobile financial services adoption mitigate financial vulnerability of small enterprises?
The role of Government support
Keywords:
Services financiers mobiles, Vulnérabilité financière, Petites entreprises, Appui institutionnel, Inclusion financièreAbstract
Purpose: This study investigates the impact of mobile financial services (MFS) adoption on the financial vulnerability of small businesses in Benin, with a focus on the moderating role of government support.
Method: Data were collected through a survey of 316 small business owners in Benin. We analyze the data using structural equation modelling (SEM) and analysis of variance (ANOVA). The reliability and validity of the measurement model were confirmed through exploratory and confirmatory factor analyses.
Results: The results reveal that mobile financial services adoption significantly reduces the financial vulnerability of small businesses. Furthermore, there is a significant difference in term of financial vulnerability between those who perceived government support and those who did not, but no significant difference in terms of mobile financial services adoption. Government support not only directly mitigates financial vulnerability but also enhances the positive effects of mobile financial services adoption on financial vulnerability. The moderating effect of government support indicates that firms benefit more from multi-sector financial services when these are complemented by institutional assistance.
Originality/Relevance: This study contributes to the literature by integrating the roles of modern financial technologies and government interventions in addressing the financial challenges of small businesses in a developing country context. It provides empirical evidence on the synergistic effects of mobile financial services and government support, offering practical insights for policymakers and financial institutions that aim to promote financial inclusion and business resilience.
Downloads
References
Abdinoor, A., and U.O.L. Mbamba. 2017. Factors influencing consumers’ adoption of mobile financial services in Tanzania. Cogent Business and Management 4 (1), https://doi.org/10.1080/23311975.2017.1392273
Adeola, O., & Evans, O. (2019). Digital tourism: mobile phones, internet and tourism in Africa. Tourism Recreation Research, 44(2), 190-202. https://doi.org/10.1080/02508281.2018.1562662
Adeola, O., & Evans, O. (2017). Financial inclusion, financial development, and economic diversification in Nigeria. The Journal of Developing Areas, 51(3), 1-15.
Adjasi, C., Hamilton, C., & Lensink, R. (2023). Fintech and financial inclusion in developing countries. In The Fintech disruption: How financial innovation is transforming the banking industry (pp. 297-328). https://doi.org/10.1007/978-3-031-23069-1_12
Aker, J. C., & Mbiti, I. M. (2010). Mobile phones and economic development in Africa. Journal of economic Perspectives, 24(3), 207-232. https://doi.org/10.1257/jep.24.3.207
Akerlof, G. A. (1970). 4. The market for ‘lemons’: quality uncertainty and the market mechanism. Market Failure or Success, 66.
Alene, E. T. (2020). Determinants that influence the performance of women entrepreneurs in micro and small enterprises in Ethiopia. Journal of Innovation and Entrepreneurship, 9, 1-20.
https://doi.org/10.1186/s13731-020-00132-6
Anderloni, L., Bacchiocchi, E., & Vandone, D. (2012). Household financial vulnerability: An empirical analysis. Research in Economics, 66(3), 284-296. https://doi.org/10.1016/j.rie.2012.03.001
Aron, J. (2018). Mobile money and the economy: a review of the evidence. The World Bank Research Observer, 33(2), 135-188. https://doi.org/10.1093/wbro/lky001
Asongu, S. A., Nwachukwu, J. C., & Aziz, A. (2018). Determinants of mobile phone penetration: Panel threshold evidence from Sub-Saharan Africa. Journal of Global Information Technology Management, 21(2), 81-110.
Babilla, T. U. K. (2023). Digital innovation and financial access for small and medium-sized enterprises in a currency union. Economic Modelling, 120, 106182. https://doi.org/10.1016/j.econmod.2022.106182
Bai, C., Quayson, M., & Sarkis, J. (2021). COVID-19 pandemic digitization lessons for sustainable development of micro-and small-enterprises. Sustainable production and consumption, 27, 1989-2001. https://doi.org/10.1016/j.spc.2021.04.035
Bartik, A. W., Bertrand, M., Cullen, Z., Glaeser, E. L., Luca, M., & Stanton, C. (2020). The impact of COVID-19 on small business outcomes and expectations. Proceedings of the national academy of sciences, 117(30), 17656-17666.
Beck, T., Pamuk, H., Ramrattan, R., & Uras, B. R. (2018). Payment instruments, finance and development. Journal of Development Economics, 133, 162-186.
Beck, T., Demirguc‐Kunt, A. S. L. I., Laeven, L., & Levine, R. (2008). Finance, firm size, and growth. Journal of money, credit and banking, 40(7), 1379-1405.
Bialowolski, P., Cwynar, A., & Weziak-Bialowolska, D. (2022). The role of financial literacy for financial resilience in middle-age and older adulthood. International Journal of Bank Marketing, 40(7), 1718-1748.
Chege, S. M., Wang, D., & Suntu, S. L. (2020). Impact of information technology innovation on firm performance in Kenya. Information Technology for Development, 26(2), 316-345. https://doi.org/10.1080/02681102.2019.1573717
Chipunza, K. J., & Fanta, A. (2022). Quality financial inclusion and its determinants in South Africa: evidence from survey data. African Journal of Economic and Management Studies, 13(2), 177-189.
Chong, A. Y. L., Ooi, K. B., Lin, B., & Tan, B. I. (2010). Online banking adoption: an empirical analysis. International Journal of bank marketing, 28(4), 267-287. https://doi.org/10.1177/0266242620945
Cowling, M., Brown, R., & Rocha, A. (2020). Did you save some cash for a rainy COVID-19 day? The crisis and SMEs. International Small Business Journal, 38(7), 593-604.
Dabla-Norris, E., Kersting, E. K., & Verdier, G. (2012). Firm productivity, innovation, and financial development. Southern Economic Journal, 79(2), 422-449.
Davis, F. D. (1989). Technology acceptance model: TAM. Al-Suqri, MN, Al-Aufi, AS: Information Seeking Behavior and Technology Adoption, 205, 219.
de Bassa Scheresberg, C., Hasler, A., & Lusardi, A. (2020). Millennial mobile payment users: A look into their personal finances and financial behavior (No. 1074). ADBI Working Paper Series.
Demirgüç-Kunt, A., Klapper, L., Singer, D., & Ansar, S. (2021). Financial inclusion, digital payments, and resilience in the age of covid-19. World Bank Report.
Despard, M. R., Nafziger-Mayegun, R. N., Adjabeng, B. K., & Ansong, D. (2017). Does revenue diversification predict financial vulnerability among non-governmental organizations in sub-Saharan Africa?. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 28, 2124-2144. https://doi.org/10.1007/s11266-017-9835-3
Doh, S., & Kim, B. (2014). Government support for SME innovations in the regional industries: The case of government financial support program in South Korea. Research policy, 43(9), 1557-1569.
Dutta, S., Lanvin, B., Wunsch-Vincent, S., & León, L. R. (Eds.). (2022). Global innovation index 2022:: what is the future of innovation-driven growth? (Vol. 2000). WIPO.
Engidaw, A. E. (2022). Small businesses and their challenges during COVID-19 pandemic in developing countries: in the case of Ethiopia. Journal of Innovation and Entrepreneurship, 11(1), 1. https://doi.org/10.1186/s13731-021-00191-3
Eriola, A. J. (2023). Informal financing and the success of female entrepreneurship: the Moderating role of financial education. La revue du financier, 45(256), 4-19. https://signal.sciencespo-lyon.fr/article/875433
Fauzi, A. A., and Sheng, M. L. (2020). The digitalization of micro, small, and medium-sized enterprises (MSMEs): An institutional theory perspective. Journal of Small Business Management, 1-26. https://doi.org/10.1080/00472778.2020.1745536. https://doi.org/10.1080/00472778.2020.1745536
Fernández‐López, S., Álvarez‐Espiño, M., Rey‐Ares, L., & Castro‐González, S. (2023). Consumer financial vulnerability: review, synthesis, and future research agenda. Journal of Economic Surveys.
Fu, X., Avenyo, E., & Ghauri, P. (2021). Digital platforms and development: a survey of the literature. Innovation and Development, 11(2-3), 303-321.
Gaglio, C., Kraemer-Mbula, E., & Lorenz, E. (2022). The effects of digital transformation on innovation and productivity: Firm-level evidence of South African manufacturing micro and small enterprises. Technological Forecasting and Social Change, 182, 121785.
Global Innovation Index (2023). Innovation in the face of uncertainty. URL: https://www. wipo. int/global_innovation_index/en.
Gomber, P., Koch, J. A., & Siering, M. (2017). Digital Finance and FinTech: current research and future research directions. Journal of Business Economics, 87, 537-580.
Gosavi, A. (2018). Can mobile money help firms mitigate the problem of access to finance in Eastern sub-Saharan Africa? Journal of African Business, 19(3), 343-360. https://doi.org/10.1080/15228916.2017.1396
Guo, H., Yang, Z., Huang, R., & Guo, A. (2020). The digitalization and public crisis responses of small and medium enterprises: Implications from a COVID-19 survey. Frontiers of Business Research in China, 14, 1-25.
Gupta, B. B., Gaurav, A., Panigrahi, P. K., & Arya, V. (2023). Analysis of artificial intelligence-based technologies and approaches on sustainable entrepreneurship. Technological Forecasting and Social Change, 186, 122152.
Heo, W., Lee, J. M., & Rabbani, A. G. (2021). Mediation effect of financial education between financial stress and use of financial technology. Journal of Family and Economic Issues, 42, 413-428.
Jack, W., and T. Suri. 2014. Risk Sharing and Transactions Costs: Evidence from Kenya’s Mobile Money Revolution. American Economic Review 104: 183–223. https://DOI:10.1257/aer.104.1183.
Jack, W., Ray, A., and Suri, T. (2013). Transaction networks: Evidence from mobile money in Kenya. American Economic Review, 103(3), 356-61.
Jebarajakirthy, C., and A. Shankar. 2021. Impact of online convenience on mobile banking adoption intention: A moderated mediation approach. Journal of Retailing and Consumer Services. https://doi.org/10.1016/j.jretconser.2020.102323.
Juergensen, J., Guimón, J., & Narula, R. (2020). European SMEs amidst the COVID-19 crisis: assessing impact and policy responses. Journal of industrial and business economics, 47(3), 499-510.
Kim, Y. I., Kim, H. C., & Yoo, J. H. (2016). Household over-indebtedness and financial vulnerability in korea: evidence from credit bureau data.
Klapper, L., & Lusardi, A. (2020). Financial literacy and financial resilience: Evidence from around the world. Financial Management, 49(3), 589-614.
Kock, F., Berbekova, A., & Assaf, A. G. (2021). Understanding and managing the threat of common method bias: Detection, prevention and control. Tourism Management, 86, 104330.
Kuan, K. K., & Chau, P. Y. (2001). A perception-based model for EDI adoption in small businesses using a technology–organization–environment framework. Information & management, 38(8), 507-521.
Lestari, D., Siti, M., Wardhani, W., & Yudaruddin, R. (2021). The impact of COVID-19 pandemic on performance of small enterprises that are e-commerce adopters and non-adopters. Problems and Perspectives in Management, 19(3), 467.
Liao, C. F., & Chen, C. D. (2020). Financial literacy and mobile payment behaviors. Journal of Accounting and Finance, 20(7).
Liu, Y., Luan, L., Wu, W., Zhang, Z., & Hsu, Y. (2021). Can digital financial inclusion promote China's economic growth?. International Review of Financial Analysis, 78, 101889. https://doi.org/10.1016/j.irfa.2021.101889
Lusardi, A., Schneider, D. J., & Tufano, P. (2011). Financially fragile households: Evidence and implications (No. w17072). National Bureau of Economic Research.
Mogaji, E., Adeola, O., Hinson, R. E., Nguyen, N. P., Nwoba, A. C., & Soetan, T. O. (2021). Marketing bank services to financially vulnerable customers: evidence from an emerging economy. International Journal of Bank Marketing, 39(3), 402-428. https://doi.org/10.1108/IJBM-07-2020-0379
Moreira, E. P., & Mehra, R. (2022). Innovation in Africa: Evidence and Implications for Growth and the Transition to High-Income Status (No. 1950). Policy Center for the New South.
Nasri, W., & Charfeddine, L. (2012). Factors affecting the adoption of Internet banking in Tunisia: An integration theory of acceptance model and theory of planned behavior. The journal of high technology management research, 23(1), 1-14. https://doi.org/10.1016/j.hitech.2012.03.001
Nguyen, H. T., Nguyen, T. T., Dang, X. L. P., & Nguyen, H. M. (2022). Informal financing choice in SMEs: do the types of formal credit constraints matter?. Journal of Small Business & Entrepreneurship, 34(3), 313-332. https://doi.org/10.1080/08276331.2019.1692441
Nguyen, B., & Canh, N. P. (2021). Formal and informal financing decisions of small businesses. Small Business Economics, 57(3), 1545-1567. https://doi.org/10.1007/s11187-020-00361-9
Nonvide, G. M. A., & Alinsato, A. S. (2023). Who uses mobile money, and what factors affect its adoption process? Evidence from smallholder households in Cote d’Ivoire. Journal of Financial Services Marketing, 28(1), 117-127. https://doi.org/10.1057/s41264-022-00144-1
Nugraha, D. P., Setiawan, B., Nathan, R. J., & Fekete-Farkas, M. (2022). FinTech adoption drivers for innovation for SMEs in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 8(4), 208.
O'Connor, G. E., Newmeyer, C. E., Wong, N. Y. C., Bayuk, J. B., Cook, L. A., Komarova, Y., ... & Warmath, D. (2019). Conceptualizing the multiple dimensions of consumer financial vulnerability. Journal of Business Research, 100, 421-430.
Ofori-Okyere, I., Edghiem, F., & Kumah, S. P. (2023). Marketing inclusive banking services to financially vulnerable consumers: a service design approach. Journal of Services Marketing, 37(2), 232-247. https://doi.org/10.1108/JSM-10-2021-0399
Okello, G.C.B., and J.M. Ntayi. 2020. Mobile money adoption and usage and financial inclusion: Mediating effect of digital consumer protection. Digital Policy, Regulation and Governance: https://doi.org/10.1108/DPRG-01-2019-0005
Oliveira, T., Thomas, M., & Espadanal, M. (2014). Assessing the determinants of cloud computing adoption: An analysis of the manufacturing and services sectors. Information & management, 51(5), 497-510.
Osei, D. B. (2024). Digital infrastructure and innovation in Africa: Does human capital mediates the effect?. Telematics and Informatics, 89, 102111. https://doi.org/10.1016/j.tele.2024.102111
Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329-340. https://doi.org/10.1016/j.bir.2017.12.003
Padungsaksawasdi, C., & Treepongkaruna, S. (2023). Investor attention and global stock market volatility: Evidence from COVID-19. Journal of Emerging Market Finance, 22(1), 85-104.
Rogers, E.M. 2003. Diffusion of Innovations, 5th ed. New York, NY: Free Press/Amazon
Seldal, M. N., & Nyhus, E. K. (2022). Financial vulnerability, financial literacy, and the use of digital payment technologies. Journal of Consumer Policy, 45(2), 281-306.
Shankar, A., C. Jebarajakirthy, and M. Ashaduzzaman. 2020. How do electronic word of mouth practices contribute to mobile banking adoption? Journal of Retailing and Consumer Services 52: 101920. https://doi.org/10.1016/j.jretconser.2019.101920
Shankar, A., and A. Behl. 2021. How to enhance consumer experience over mobile wallet: A data-driven approach. Journal of Strategic Marketing. https://doi.org/10.1080/0965254X.2021.1999306.
Sharma, S. K., Janssen, M., Bunker, D., Dominguez-Péry, C., Singh, J. B., Dwivedi, Y. K., & Misra, S. K. (2023). Unlocking the potential of smart technologies: addressing adoption challenges. Information Systems Frontiers, 25(4), 1293-1298. https://doi.org/10.1007/s10796-023-10408-3
Shinozaki, S. (2014). Innovative financing models for SMEs and the regulatory implications. In Global Shock, Risks, and Asian Financial Reform (pp. 628-675). Edward Elgar Publishing.
Soetan, T. O., Mogaji, E., & Nguyen, N. P. (2021). Financial services experience and consumption in Nigeria. Journal of Services Marketing, 35(7), 947-961.
Stiglitz, J. E., & Weiss, A. (1981). Credit rationing in markets with imperfect information. The American economic review, 71(3), 393-410
Tan, M., & Teo, T. S. (2000). Factors influencing the adoption of Internet banking. Journal of the Association for information Systems, 1(1), 5.
Tang, C., Xu, Y., Hao, Y., Wu, H., & Xue, Y. (2021). What is the role of telecommunications infrastructure construction in green technology innovation? A firm-level analysis for China. Energy Economics, 103, 105576. https://doi.org/10.1016/j.eneco.2021.105576
Tevel, E., Katz, H., & Brock, D. M. (2015). Nonprofit financial vulnerability: Testing competing models, recommended improvements, and implications. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 26(6), 2500-2516.
Wang, X., & He, G. (2020). Digital financial inclusion and farmers’ vulnerability to poverty: Evidence from rural China. Sustainability, 12(4), 1668. https://doi.org/10.3390/su12041668
Wewege, L., & Thomsett, M. C. (2019). The digital banking revolution: how fintech companies are transforming the retail banking industry through disruptive financial innovation. Walter de Gruyter GmbH & Co KG.
Wilson, T. A. (2012). Supporting social enterprises to support vulnerable consumers: the example of community development finance institutions and financial exclusion. Journal of consumer policy, 35, 197-213.
World Bank (2020). Mobile financial services, p. 54
Yoon, C., Lim, D., & Park, C. (2020). Factors affecting adoption of smart farms: The case of omputers in Human Behavior, 108,
Ye, F., Ke, M., Ouyang, Y., Li, Y., Li, L., Zhan, Y., & Zhang, M. (2024). Impact of digital technology usage on firm resilience: a dynamic capability perspective. Supply Chain Management: An International Journal, 29(1), 162-175.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Jesse ERIOLA
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
