Mobile Money and Financial Inclusion in a Bank-Led Regulatory Regime: Evidence from a Provincial Panel in Pakistan

Abstract

Purpose: This study examines the relationship between mobile money penetration and financial inclusion across Pakistani provinces, offering evidence from a bank-led regulatory environment, unlike the telecom-led systems dominating existing research.

Design/Methodology/Approach: A province-year panel of Pakistan's four provinces and the Islamabad Capital Territory (five provincial/territorial units), 2017–2024 (N = 40), was constructed from the World Bank Global Findex, State Bank of Pakistan, GSMA, and national statistical sources. Fixed-effects panel estimation with robustness and sensitivity analyses evaluated the association between mobile money penetration and financial inclusion.

Findings: Mobile money penetration is positively associated with formal account ownership, though the estimate remains statistically imprecise given the panel's limited cross-sectional dimension. The estimated association is descriptively larger for digital payment usage than for formal savings participation, although the two outcomes capture distinct dimensions of financial inclusion, suggesting mobile money may contribute more to transaction-based inclusion than to deeper financial engagement. Rural provinces show relatively stronger associations, while gender-related differences remain weak and inconclusive. Given the effective sample of five provincial/territorial units, findings should be interpreted as descriptive and hypothesis-generating rather than confirmatory.

Research Limitations/Implications: The study is constrained by the small number of cross-sectional units, the correlational design, and interpolation/extrapolation of some indicators. Larger datasets and causal identification strategies are needed.

Originality/Value: This study offers one of the first provincial panel analyses of mobile money and financial inclusion in Pakistan's bank-led regulatory context, extending evidence beyond the telecom-led experiences reported in Sub-Saharan Africa and providing a foundation for future research and policy.

Keywords: Financial inclusion; Mobile money; Digital wallets; FinTech; Pakistan; Emerging markets; Panel data

Paper type: Research paper