Mobile Money Drives Economic Growth More Than Bank Branches

The Bank Branch That Lives in Your Pocket

In 2009, Nigeria had roughly 4,500 bank branches for a population of over 150 million people. If you wanted to send money to a relative in a rural village, you either traveled for hours or handed cash to a bus driver and prayed. By 2023, over 200 million mobile money accounts had been registered in the country. The bank didn't come to the village. The village got a phone.

A new study by Jeffrey Ogie Eguavoen and Simon Ayo Adekunle (2025) at NIU, published in the NIU Journal of Humanities, puts hard numbers on something many of us have felt intuitively: mobile money is not just a convenience. It is a measurable engine of economic growth. And here is the part that surprised me: it appears to matter more than building more bank branches.

What Did They Actually Measure?

The researchers looked at Nigeria from 2009 to 2023, a period that captures the explosion of mobile money in Africa's largest economy. They used a method called fully modified ordinary least squares (FMOLS), which is a fancy way of saying they tried to account for the fact that economic data is messy and trends can fool you. They tested five specific indicators of financial inclusion against Nigeria's GDP growth:

• ▸Number of automated teller machines (ATMs)
• ▸Number of registered mobile money accounts (RMM)
• ▸Private credit as a share of GDP (PCR)
• ▸Number of bank branches (NBB)
• ▸Total volume of mobile money transactions as a share of GDP (VMM)

The results are worth your time.

The Big Surprise: Bank Branches Matter, but Mobile Money Matters More

Here is what the data says. ATMs, private credit, bank branches, and the total volume of mobile money transactions all had a statistically significant positive relationship with economic growth. That part is not shocking. You would expect more financial activity to correlate with a bigger economy.

But look closer. The volume of mobile money transactions to GDP (VMM) showed a significant effect. The sheer number of registered mobile money accounts (RMM) did not. That is the twist.

Eguavoen and Adekunle (2025) found that having millions of accounts sitting idle does nothing for growth. What matters is activity. People using those accounts to transact, to send money, to pay for goods, to run businesses. The phone is not a bank vault. It is a payment rail. And when that rail carries volume, the economy moves.

What About the Number of Accounts?

The authors found no significant relationship between the number of registered mobile money accounts and economic growth. That sounds counterintuitive. If you have 200 million accounts, shouldn't that be a sign of financial inclusion?

Not if those accounts are dormant. Nigeria has a well documented problem with "account opening for the sake of it." Mobile network operators and banks have aggressively pushed signups, often incentivized by government targets. But many accounts are never used after the first deposit. They exist as statistics, not as economic tools.

The lesson is uncomfortable: counting accounts is a vanity metric. Counting transactions is real.

ATMs Are Still the Workhorses

The study also found that ATMs had a significant positive effect on growth. That makes sense. ATMs are the physical infrastructure that allows people to access cash when they need it. In a country where cash is still king for many transactions, ATMs provide liquidity. They are the bridge between the digital and the physical.

But here is the thing about ATMs: they are expensive to install and maintain. They require security, electricity, and a steady supply of cash. In rural areas, they often sit empty or broken. Mobile money does not have that problem. A phone does not need a generator.

Bank Branches: Still Relevant, but Less Efficient

The number of bank branches also showed a significant positive relationship with growth. That is not surprising either. Branches provide trust, formal credit, and services that phones cannot yet replicate fully.

But consider the cost. A single bank branch in a rural Nigerian town might serve a few thousand customers and cost hundreds of thousands of dollars to set up. A mobile money agent with a basic phone can serve hundreds of transactions a day for a fraction of that cost. The study suggests that branches still matter, but the marginal impact of each new branch is probably lower than the marginal impact of each new mobile money transaction.

In other words, if you have a limited budget for financial inclusion, you get more growth per dollar by investing in mobile money infrastructure than by building another brick and mortar branch.

Private Credit: The Classic Growth Driver Still Works

Private credit to GDP (PCR) also had a significant positive effect. This is the old school story of financial development: when banks lend money to businesses, those businesses invest, hire, and grow. It works. It has always worked. The study confirms it.

But here is the tension. Mobile money is great for payments and transfers. It is not yet great for credit. Most mobile money platforms in Nigeria do not offer loans at scale. The ones that do, like Branch or Carbon, operate outside the traditional banking system. The study did not test mobile lending specifically. That is a gap worth noting.

Methodological Honesty: How Solid Is This?

The authors used FMOLS, which is a standard technique for time series data. They tested for unit roots (stationarity) and cointegration (long run relationships). They controlled for the usual suspects. The data came from the Central Bank of Nigeria and the National Bureau of Statistics. That is solid.

But there is a limitation. Nigeria's GDP data has been revised multiple times during this period. The base year changed in 2014, and the methodology changed again in 2018. Those revisions can shift the numbers. The authors acknowledge this, but it is a real concern.

Also, correlation is not causation. The study shows a statistical relationship, not a proven mechanism. It is possible that economic growth itself drives mobile money adoption, rather than the other way around. The authors used techniques to address reverse causality, but no observational study can fully settle the question.

What the Research Does NOT Prove

This is the part that matters for policymakers and investors. The study does not prove that simply giving everyone a phone will grow the economy. It does not prove that mobile money is a substitute for formal banking. It does not prove that mobile money lending works the same way as mobile money payments.

What it does prove is that the volume of mobile money transactions is a statistically significant predictor of economic growth in Nigeria over a 14 year period. That is a real finding. But it is a finding about a specific country, a specific time period, and a specific set of indicators. Nigeria is not Kenya. Nigeria is not India. The results might not generalize.

The Bigger Picture: Why This Changes the Conversation

For years, the financial inclusion community has debated whether to prioritize bank branches or digital channels. The World Bank's Global Findex survey tracks both. Donors fund both. Governments build both.

This study suggests that the answer is not either/or. It is both. But the balance matters. If you are a finance minister in a developing country with a limited budget, the data says: invest in mobile money infrastructure first. Build the transaction volume. The bank branches can come later, and they will be more effective if they serve people who are already using digital payments.

The Agent Network Is the Real Infrastructure

One reason mobile money works is the agent network. In Nigeria, there are over 1.5 million mobile money agents. They are the people who let you deposit cash into your mobile wallet or withdraw cash from it. They are the human interface between the digital and the physical.

The study did not measure agents directly, but the volume of transactions (VMM) is a proxy for how active that agent network is. When agents are busy, the economy moves. When agents are idle, the accounts sit empty.

The Gender Angle

Nigeria has one of the largest gender gaps in financial inclusion in the world. Women are significantly less likely to have a bank account or use mobile money. The study did not break down its results by gender, but the implications are clear. If mobile money drives growth, and women are excluded from mobile money, then half the population is being left out of the growth engine.

That is not just a social problem. It is an economic inefficiency. The next study should ask: does closing the gender gap in mobile money produce even larger growth effects?

What This Actually Means

Here is the practical takeaway for anyone who cares about economic development, financial technology, or just understanding how money moves in the 21st century.

• ▸Count transactions, not accounts. A million dormant accounts are a vanity metric. A thousand active transactions per day is an economic signal. Policymakers should track transaction volume to GDP, not just registration numbers.

• ▸Mobile money is a complement to bank branches, not a replacement. The study found both matter. But the marginal cost of a mobile money transaction is near zero. The marginal cost of a bank branch is high. Invest in the cheaper infrastructure first.

• ▸ATMs still matter, but they are a bridge technology. As mobile money becomes more integrated with the formal economy, the need for cash will decline. But that transition takes years. Keep the ATMs running while you build the digital rails.

• ▸Private credit is the missing piece. Mobile money is great for payments. It is not yet great for lending. If mobile money platforms can crack credit at scale, the growth effects could be much larger.

• ▸Nigeria is not a universal model, but it is a useful one. The study is specific to Nigeria, but the dynamics likely apply to other countries with low bank branch density and high mobile penetration. If you are in Ghana, Tanzania, or Bangladesh, pay attention.

The Bottom Line

Eguavoen and Adekunle (2025) have given us a data point that reinforces what many in the field have suspected: mobile money is not a toy. It is not a niche product for the unbanked. It is a macroeconomic force. When people use their phones to move money, the economy grows. Not because of some magical property of phones, but because transactions create velocity, and velocity creates economic activity.

The bank branch is not dead. But it is no longer the only game in town. The phone in your pocket is a branch too. And it is open 24 hours a day, seven days a week, with no queue and no teller.

That is the kind of financial inclusion that actually moves the needle.