## Mobile Internet, Collateral, and Banking

_IMF Working Papers, March 29, 2024_

## Source details

**Canonical URL:** [Mobile Internet, Collateral, and Banking](https://www.imf.org/en/publications/wp/issues/2024/03/29/mobile-internet-collateral-and-banking-546932)

## Other formats

- [Markdown version](/en/publications/wp/issues/2024/03/29/mobile-internet-collateral-and-banking-546932/index.md)
- [Structured JSON version](/en/publications/wp/issues/2024/03/29/mobile-internet-collateral-and-banking-546932/index.json)
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## Bibliographic details
- Authors: Angelo D’Andrea, Patrick Hitayezu, Kangni R Kpodar, Nicola Limodio, Andrea F Presbitero
- Published: March 29, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400270734.001

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### Summary findings
- Combining administrative data on credit, internet penetration and a land reform in Rwanda, the paper shows that the complementarity between technology and law can overcome financial frictions.
- Leveraging quasi-experimental variation in 3G availability from lightning strikes and incidental coverage, mobile connectivity steers borrowers from microfinance to commercial banks and improves loan terms.
- 3G internet facilitates the acquisition of land titles from the reform, which are used as collateral for bank loans and mortgages.
- The availability of collateral mediates 35% of the overall effect of mobile internet on credit.
- The availability of collateral mediates 80% of the effect of mobile internet for collateralized loans.

### Data and identification
- Data sources combined: administrative credit records, measures of internet penetration (3G availability), and details of a land reform in Rwanda.
- Identification strategy: quasi-experimental variation in 3G availability driven by lightning strikes and incidental coverage.

### Mechanisms and outcomes
- Mechanism emphasized: mobile internet reduces frictions by enabling access to land titles produced by the reform; land titles serve as collateral for bank lending and mortgages.
- Outcomes observed:
  - Reallocation of borrowers from microfinance institutions to commercial banks.
  - Improvement in loan terms associated with increased mobile connectivity and collateralization.

### Policy implications
- Policies that enhance mobile internet connectivity can interact with legal reforms (e.g., land titling) to expand access to bank credit and improve loan terms.
- Legal infrastructure that increases availability of collateral (land titles) magnifies the credit-enhancing effects of mobile internet.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2024/03/29/mobile-internet-collateral-and-banking-546932_