Mobile Money and the Economy: A Review of the Evidence

Abstract

Mobile money is a recent innovation that provides financial transaction services via mobile phone, including to the unbanked global poor. The technology has spread rapidly in the developing world, "leapfrogging" the provision of formal banking services by solving the problems of weak institutional infrastructure and the cost structure of conventional banking. This article examines the evolution of mobile money and its important role in widening financial inclusion. It explores the channels of economic influence of mobile money from a micro perspective, and critically reviews the empirical literature on the economic impact of mobile money. The evidence convincingly suggests that mobile money fosters risk-sharing, but direct evidence of the promotion of welfare and saving is still mostly rather less robust.

Informal Sector and Mobile Financial Services in Developing Countries: Does Financial Innovation Matter?

“…We estimate the propensity score (PS) using a logit model with MFS adoption as the dependent variable). To estimate the PS, we rely on the literature (GSMA, 2016b;Mothobi and Grzybowski, 2017;Della Peruta, 2018;Aron, 2018) to identify the set of variables that may likely to influence both MFS adoption and informality. These include: mobile phone market share (the ratio of mobile phones subscription in country i to that of his region), income level (measured by the logarithm of household consumption per capita), financial development (domestic credit to private sector), investment freedom, rule of law, inflation, social globalization index, labor force participation rate, urban population growth, and education level (mean years of schooling).…”

“…2 Mobile Financial Services (MFS) refer to the use of a mobile phone to access financial services like credit and savings, in addition to mobile money (GSMA, 2018). transactions, for instance: ecommerce, direct wage payments to mobile accounts by employers, digitalization of payments among firms, social benefits by public authorities, and tax payments to tax administrations (Aron, 2018).…”

M-PESA and Financial Inclusion in Kenya: Of Paying Comes Saving?

“…a The number of people withdrawing money is higher than the number of M-PESA users because even non-users can receive money. See [23] (Box 1, pp. 140-144) for a more detailed description.…”

“…Following [24], we have grouped the papers depending on whether they examine adoption of M-PESA, its usage, or its impact on society-in that order. Note that in this section we focus exclusively on Kenya (because both the setting and the characteristics of the MFS schemes may differ across countries [23] (p. 167)). In later sections we do, however, compare our set-up and results with approaches and findings of papers for other African countries.…”

Mobile Payment and Informal Business: Evidence from China's Household Panel Data

“…This study uses panel data to better control for potential selection bias. As suggested by Aron (2018), the best approach to examine the impact of MP is to fully exploit panel data using household fi xed effects and includes location-by-time and rural-by-time dummies to help control for time-varying heterogeneity. Second, using a panel structure of household-level data, this study examines the impact of using MP on the three pre-MP groups -agricultural, formal and informal business households -and examine how transitions among three groups changed in the post-MP period.…”