Mobile-banking and Entrepreneurship - Is there a link? A case study on South Africa

Abstract: Entrepreneurship, which often manifests itself in the shape of microfirms or small and medium sized firms, is an important source of job creation and growth. These types of firms are often hindered by financial constraints and sometimes lack access to formal financial services. Mobile-financial services, such as mobile-banking, have been used as a tool for increasing access to finance and in aiding financial inclusion. This paper investigates the potential link between mobile-banking and entrepreneurship in South Africa. Since South Africa, a developing country with an upper-middle income status, has major problems with unemployment, this relationship is of interest to investigate. A quantitative method is used. Data was collected through a survey during an eight- week period in the country. 110 responses were collected and the data extracted from those was used to make a probit analysis on a binary choice model with entrepreneurship as the dependent variable and mobile-banking along with other control variables as determinants. As a complement to this analysis, a few semi- structured interviews were conducted with relevant persons. The results indicate that there is a positive and significant link between entrepreneurship and mobile-banking in South Africa. This result is likely to be applicable to economies with similar financial characteristics.