DETERMINANTS OF AVERAGE TRANSACTION SIZE IN MOBILE FINANCIAL SERVICES: EVIDENCE FROM BANGLADESH

Mobile Financial Service (MFS) have expanded rapidly in Bangladesh, but existing research focuses on adoption, financial inclusion and aggregate transaction values, leaving the average size of each transaction largely unexamined. In order to fill this gap, the current study focuses on determinants of Average MFS Transaction Size (AMTS). For this reason, AMTS is computed as the ratio of total transaction value per month to the total number of transactions. With the help of 38 monthly observations ranging from January 2022 to February 2025 obtained from Bangladesh Bank, this research will employ descriptive statistics, correlation, Augmented Dickey Fuller (ADF) test, OLS regression analysis along with residual tests, Newey-West HAC standard errors and ARDL bounds test for the analysis. The result of this research suggests that there has been an increase in AMTS from BDT 2,125 in January 2022 to BDT 2,454 in February 2025. Upon conducting the OLS regression analysis on the baseline model, it was observed that the only significant factor determining the AMTS was the formal inward remittance which increases it by 16.9 BDT for every BDT 1,000 crore change in it. Both active accounts and exchange rate were found statistically insignificant and perhaps the reason is a very high correlation between them (0.90). The ARDL bounds test failed to provide any conclusive evidence; furthermore, there is no statistical significance in long run coefficients while short run estimates suggest that an increase in the number of active accounts is associated with decrease in AMTS due to the same behavior of new users. All results must be interpreted as associations and not causations due to data limitations, lack of controls and seasonal effect.