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Is mobile money changing rural Africa? Evidence from a field experiment

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  • Catia Batista
  • Pedro C. Vicente
Abstract
What is the economic impact of newly introducing mobile money in rural areas underserved by financial services? This study is the first to use a randomized controlled trial to answer this research question. Following a sample of rural communities in Southern Mozambique, our experimental results show that the availability of mobile money translated into clear adoption of these services, measured through administrative data on mobile money transactions. We find that mobile money improved consumption smoothing by treated households, i.e., they became less vulnerable to adverse weather and self-reported shocks. However, we also observe that mobile money led to reduced investment, especially in agriculture. We document increases in the number of migrants in a household and in the migrant remittances received by rural households particularly in presence of adverse shocks, while there are no clear effects on savings. We interpret these results as evidence that, by drastically reducing the transaction costs associated with migrant remittances and improving migration-based insurance possibilities, mobile money acted as a facilitator of migration from rural to urban areas.

Suggested Citation

  • Catia Batista & Pedro C. Vicente, 2018. "Is mobile money changing rural Africa? Evidence from a field experiment," NOVAFRICA Working Paper Series wp1805, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    • Handle: RePEc:unl:novafr:wp1805
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    References listed on IDEAS

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    Cited by:

    1. Erika Deserranno & Gianmarco León-Ciliotta & Firman Witoelar, 2021. "When Transparency Fails: Financial Incentives for Local Banking Agents in Indonesia," Working Papers 1233, Barcelona School of Economics.
    2. Catia Batista & Sandra Sequeira & Pedro C. Vicente, 2022. "Closing the Gender Profit Gap?," Management Science, INFORMS, vol. 68(12), pages 8553-8567, December.
    3. Catia Batista & Pedro C. Vicente, 2020. "Adopting Mobile Money: Evidence from an Experiment in Rural Africa," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 594-598, May.
    4. Catia Batista & Julia Seither, 2019. "Aspirations, expectations, identities: behavioral constraints of micro-entrepreneurs," NOVAFRICA Working Paper Series wp1906, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    5. Giné, Xavier & Goldberg, Jessica, 2023. "Experience in financial decision-making: Field evidence from Malawi," Journal of Development Economics, Elsevier, vol. 161(C).
    6. Grzybowski, Lukasz & Lindlacher, Valentin & Mothobi, Onkokame, 2023. "Mobile money and financial inclusion in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 65(C).
    7. Cátia Batista & Marcel Fafchamps & Pedro C Vicente, 2022. "Keep It Simple: A Field Experiment on Information Sharing among Strangers [Changing Saving and Investment Behavior: The Impact of Financial Literacy Training and Reminders on Micro-Businesses]," The World Bank Economic Review, World Bank, vol. 36(4), pages 857-888.
    8. Kanz, Martin & Breza, Emily & Klapper, Leora F., 2020. "Learning to Navigate a New Financial Technology: Evidence from Payroll Accounts," CEPR Discussion Papers 15565, C.E.P.R. Discussion Papers.
    9. Parlasca, Martin & Johnen, Constantin & Qaim, Matin, 2021. "Use of Mobile Financial Services Among Farmers in Africa: Insights from Kenya," 2021 Conference, August 17-31, 2021, Virtual 315863, International Association of Agricultural Economists.

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    More about this item

    Keywords

    Fintech; mobile money; technology adoption; insurance; consumption smoothing; investment; remittances; savings; migration; Mozambique; Africa.;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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