Determinants of mobile money adoption and its effect on financial inclusion in Uganda

Abstract

Despite advancements in mobile money technology, financial inclusion in Uganda remains limited, with low active usage and uptake rates. This study examines the determinants of mobile money adoption and its effect on borrowing and saving behaviors using data from the World Bank Global Findex 2021. A quantitative methodology, including logistic regression and mediation analysis examines how demographic and socioeconomic factors—such as age, gender, education, employment status, income, location, and mobile phone ownership— affect mobile money adoption, saving, and borrowing. Findings show mobile money account holders are 3.92 times more likely to save and 2.75 times more likely to borrow than non- users. Mobile phone ownership plays a key role significantly impacting both account ownership and saving behavior. Income and employment status also affect savings, with higher-income individuals and those employed more likely to save. Mediation analysis reveals that mobile money usage mediates the effects of employment, mobile phone ownership, and income on savings and borrowing behaviors. However, age, gender, and location have weaker effects. The study highlights the importance of mobile money in enhancing financial inclusion, offering insights for policymakers to promote wider adoption and address disparities.