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Nixon Kamukama
Makerere University Business School, Uganda

Sulait Tumwine
Makerere University Business School, Uganda


 The purpose of this paper is twofold: (i) to establish whether the growth in mobile commerce in Uganda
has disadvantaged commercial banks in way that their liquidity has been indirectly stolen (Pickens, 2009)
and (ii)to examine the extent to which Mobile Money services have affected liquidity position of
Uganda’s commercial banks.

The paper used a cross sectional study design and emphasis was put on quantitative research approach.
However, for data analysis, descriptive statistics together with linear regression tests were applied.
Findings indicated that Ugandan commercial banks are in liquidity crisis, a phenomena that has
constrained their lending capacity. What is more unfortunate is that the commercial banks’ liquidity
ratios are falling short of the Bank of Uganda’s threshold ratio of 20% representing a ratio of total liquid
assets to total deposit liability. Single-handedly, mobile money services account for 36.7% of liquidity
variance in Ugandan Commercial Banks.
The study recommends that commercial banks should partner or enter into joint venture with mobile
money operators. With such partnership, banks will have effective models to expand their physical reach
into poor and rural areas. This arrangement will deliver the required level of proximity and low
transaction costs, which are essential in increasing client deposits, a source of liquidity.
More so, commercial banks should take advantage of the products that are not provided by mobile
operators. For example, credit or loan facilities and insurance services where banks have competitive
advantage over mobile operators should be conveniently provided at a low cost to clients. It is hoped that
this will build a strong bond between the client and the bank which guarantees regular flow of cash in or
cash out transaction.

Key words: Mobile Money services and Bank Liquidity