Monetary policy effectiveness in the advent of mobile money activity : empirical evidence from Ghana

Financial development impacts a country’s economic growth and development. Due to this, many nations have sought new ways to bring about financial sector development. For developing economies, innovations in the financial sector are a sure bet for the development of financial inclusion. Mobile money is one of them. However, as the financial sector innovate, the Central Bank may lose control, rendering monetary policy ineffective. Therefore, this study examines one such innovation’s effect on monetary policy effectiveness. Using SVAR and monthly data spanning from January 2012 to December 2018, the study found that monetary policy becomes less effective under mobile money growth. The study further revealed that policy rates respond to mobile money growth in Ghana. In conducting monetary policy in Ghana, the study recommends that the monetary policy authority includes mobile money activity.