Mobile Banking: The Impact Of M-PESA In Kenya

M-Pesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007. The authors examine how M-Pesa is used as well as its economic impacts. Analyzing data from two waves of individual data on financial access in Kenya, it was found that increased use of M-Pesa lowers the propensity of people to use informal savings mechanisms such as ROSCAS, but raises the probability of their being banked. In addition, the authors find that M-Pesa causes decreases in the prices of competing money transfer services such as Western Union. While little evidence was found about the fact that people use their M-Pesa accounts as a place to store wealth, the results suggest that M-Pesa improves individual outcomes by promoting banking and increasing transfers. http://www.brown.edu/Departments/Economics/Papers/2011/2011-13_paper.pdf