IDEAS home Printed from https://ideas.repec.org/a/inm/ormsom/v21y2019i2p290-307.html
   My bibliography  Save this article

Banking on “Mobile Money”: The Implications of Mobile Money Services on the Value Chain

Author

Listed:
  • Yan Dong

    (Darla Moore School of Business, University of South Carolina, Columbia, South Carolina 29208)

  • Moonwon Chung

    (Darla Moore School of Business, University of South Carolina, Columbia, South Carolina 29208)

  • Chen Zhou

    (Darla Moore School of Business, University of South Carolina, Columbia, South Carolina 29208)

  • Sriram Venkataraman

    (Darla Moore School of Business, University of South Carolina, Columbia, South Carolina 29208)

Abstract

Problem definition : This study examines the effects of mobile money on the value chain, that is, mobile network operators (MNOs), banks, and end users. Mobile money is an innovative technology that is bundled with related services and is designed to provide cost-efficient financial inclusion for underserved populations in the developing world. Academic/practical relevance : By studying the interaction between mobile money value chain structures and service bundle compositions, we expand our understanding on value chain revenue allocation mechanisms in developing economies. This study provides a valuable foundation for practitioners to better coordinate the value chain and facilitate sustainable growth of mobile money services. Methodology : By combining proprietary and public data, we assess the impact of launching mobile money and the potential asymmetric effects of credit payments on the performance of the value chain. We identify control groups by using propensity score matching and estimate a quasi-experimental difference-in-difference regression. Results : We find that the launch of mobile money has had a positive effect on the performance of the value chain, consisting of old, poor, and undereducated populations. However, although some bundled, complementary services, such as credit payments, benefit participating banks, they may be associated with lower MNO profits. Moreover, the effects of mobile money on the value chain remain positive and stable over time, whereas the effects of credit payments are stronger over time. Managerial Implications : Findings suggest that MNOs and banks should be encouraged to launch mobile money and expand the customer base to old, poor, and less-educated members of the population. Certain services such as credit payment may yield asymmetric benefits such that banks could consider compensation mechanisms for the MNOs. Policy makers in developing countries should encourage coordination and promote a fair distribution of benefits between the two partners to sustain the growth of mobile money services. The online appendices are available at https://doi.org/10.1287/msom.2018.0717 . his paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.

Suggested Citation

  • Yan Dong & Moonwon Chung & Chen Zhou & Sriram Venkataraman, 2019. "Banking on “Mobile Money”: The Implications of Mobile Money Services on the Value Chain," Manufacturing & Service Operations Management, INFORMS, vol. 21(2), pages 290-307, May.
    • Handle: RePEc:inm:ormsom:v:21:y:2019:i:2:p:290-307
    DOI: 10.1287/msom.2018.0717
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/msom.2018.0717
    Download Restriction: no
    File URL: https://libkey.io/10.1287/msom.2018.0717?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. William Jack & Tavneet Suri, 2014. "Risk Sharing and Transactions Costs: Evidence from Kenya's Mobile Money Revolution," American Economic Review, American Economic Association, vol. 104(1), pages 183-223, January.
    2. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    3. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    4. Barbara Sianesi, 2004. "An Evaluation of the Swedish System of Active Labor Market Programs in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 133-155, February.
    5. William Jack & Adam Ray & Tavneet Suri, 2013. "Transaction Networks: Evidence from Mobile Money in Kenya," American Economic Review, American Economic Association, vol. 103(3), pages 356-361, May.
    6. Alexander Chernev, 2005. "Feature Complementarity and Assortment in Choice," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 31(4), pages 748-759, March.
    7. Andrea Mantovani & Francisco Ruiz-Aliseda, 2016. "Equilibrium Innovation Ecosystems: The Dark Side of Collaborating with Complementors," Management Science, INFORMS, vol. 62(2), pages 534-549, February.
    8. Ravi Kumar, P. & Ravi, V., 2007. "Bankruptcy prediction in banks and firms via statistical and intelligent techniques - A review," European Journal of Operational Research, Elsevier, vol. 180(1), pages 1-28, July.
    9. James, Christopher, 1995. "When Do Banks Take Equity in Debt Restructurings?," The Review of Financial Studies, Society for Financial Studies, vol. 8(4), pages 1209-1234.
    10. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-528, June.
    11. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2006. "Bank concentration, competition, and crises: First results," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1581-1603, May.
    12. Michael R. Veall & Klaus F. Zimmermann, 1994. "PRACTITIONERS CORNER: Goodness of Fit Measures in the Tobit Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(4), pages 485-499, November.
    13. Constantinos C. Markides & Peter J. Williamson, 1994. "Related diversification, core competences and corporate performance," Strategic Management Journal, Wiley Blackwell, vol. 15(S2), pages 149-165, June.
    14. Nick Hughes & Susie Lonie, 2007. "M-PESA: Mobile Money for the "Unbanked" Turning Cellphones into 24-Hour Tellers in Kenya," Innovations: Technology, Governance, Globalization, MIT Press, vol. 2(1-2), pages 63-81, April.
    15. Keisuke Hirano & Guido W. Imbens & Geert Ridder, 2003. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," Econometrica, Econometric Society, vol. 71(4), pages 1161-1189, July.
    16. Hernando, Ignacio & Nieto, Maria J., 2007. "Is the Internet delivery channel changing banks' performance? The case of Spanish banks," Journal of Banking & Finance, Elsevier, vol. 31(4), pages 1083-1099, April.
    17. Isaac Mbiti & David N. Weil, 2013. "The Home Economics of E-Money: Velocity, Cash Management, and Discount Rates of M-Pesa Users," American Economic Review, American Economic Association, vol. 103(3), pages 369-374, May.
    18. Lukasz Grzybowski, 2005. "Regulation of Mobile Telephony across the European Union: An Empirical Analysis," Journal of Regulatory Economics, Springer, vol. 28(1), pages 47-67, July.
    19. Edward G. Anderson Jr. & Geoffrey G. Parker, 2013. "Integration and Cospecialization of Emerging Complementary Technologies by Startups," Production and Operations Management, Production and Operations Management Society, vol. 22(6), pages 1356-1373, November.
    20. Imbens,Guido W. & Rubin,Donald B., 2015. "Causal Inference for Statistics, Social, and Biomedical Sciences," Cambridge Books, Cambridge University Press, number 9780521885881.
    21. Xin Xu & Viswanath Venkatesh & Kar Yan Tam & Se-Joon Hong, 2010. "Model of Migration and Use of Platforms: Role of Hierarchy, Current Generation, and Complementarities in Consumer Settings," Management Science, INFORMS, vol. 56(8), pages 1304-1323, August.
    22. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    23. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    24. Hongju Liu & Pradeep K. Chintagunta & Ting Zhu, 2010. "Complementarities and the Demand for Home Broadband Internet Services," Marketing Science, INFORMS, vol. 29(4), pages 701-720, 07-08.
    25. DeYoung, Robert & Lang, William W. & Nolle, Daniel L., 2007. "How the Internet affects output and performance at community banks," Journal of Banking & Finance, Elsevier, vol. 31(4), pages 1033-1060, April.
    26. Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-1266, September.
    27. Veall, Michael R & Zimmermann, Klaus F, 1994. "Goodness of Fit Measures in the Tobit Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(4), pages 485-499, November.
    28. Evans, David S & Heckman, James J, 1984. "A Test for Subadditivity of the Cost Function with an Application to the Bell System," American Economic Review, American Economic Association, vol. 74(4), pages 615-623, September.
    29. Ahn, Jae-Hyeon & Han, Sang-Pil & Lee, Yung-Seop, 0. "Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry," Telecommunications Policy, Elsevier, vol. 30(10-11), pages 552-568, November.
    30. Ashutosh Prasad & R. Venkatesh & Vijay Mahajan, 2010. "Optimal Bundling of Technological Products with Network Externality," Management Science, INFORMS, vol. 56(12), pages 2224-2236, December.
    31. Fries, Steven & Taci, Anita, 2005. "Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 55-81, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ugur, Mehmet & Trushin, Eshref, 2018. "Asymmetric information and heterogeneous effects of R&D subsidies: evidence on R&D investment and employment of R&D personel," Greenwich Papers in Political Economy 21943, University of Greenwich, Greenwich Political Economy Research Centre.
    2. Andrea Morescalchi, 2021. "A new career in a new town. Job search methods and regional mobility of unemployed workers," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(2), pages 223-272, May.
    3. Paudel, G. & Krishna, V. & McDonald, A., 2018. "Why some inferior technologies succeed? Examining the diffusion and impacts of rotavator tillage in Nepal Terai," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277149, International Association of Agricultural Economists.
    4. Annabelle Doerr & Bernd Fitzenberger & Thomas Kruppe & Marie Paul & Anthony Strittmatter, 2017. "Employment and Earnings Effects of Awarding Training Vouchers in Germany," ILR Review, Cornell University, ILR School, vol. 70(3), pages 767-812, May.
    5. Dettmann, E. & Becker, C. & Schmeißer, C., 2011. "Distance functions for matching in small samples," Computational Statistics & Data Analysis, Elsevier, vol. 55(5), pages 1942-1960, May.
    6. Cadot, Olivier & Fernandes, Ana M. & Gourdon, Julien & Mattoo, Aaditya, 2015. "Are the benefits of export support durable? Evidence from Tunisia," Journal of International Economics, Elsevier, vol. 97(2), pages 310-324.
    7. Verena Lauber & Johanna Storck, 2016. "Helping with the Kids? How Family-Friendly Workplaces Affect Parental Well-Being and Behavior," Discussion Papers of DIW Berlin 1630, DIW Berlin, German Institute for Economic Research.
    8. Roberto Antonietti & Davide Antonioli, 2007. "Production Offshoring and the Skill Composition of Italian Manufacturing Firms: A Counterfactual Analysis," Working Papers 2007.97, Fondazione Eni Enrico Mattei.
    9. Kodjo Adandohoin & Vigninou Gammadigbe, 2022. "The revenue efficiency consequences of the announcement of a tax transition reform: The case of WAEMU countries," African Development Review, African Development Bank, vol. 34(S1), pages 195-218, July.
    10. Nguyen Viet, Cuong, 2012. "Selection of Control Variables in Propensity Score Matching: Evidence from a Simulation Study," MPRA Paper 36377, University Library of Munich, Germany.
    11. Bernhard Schmidpeter, 2015. "The Fatal Consequences of Grief," CDL Aging, Health, Labor working papers 2015-07, The Christian Doppler (CD) Laboratory Aging, Health, and the Labor Market, Johannes Kepler University Linz, Austria.
    12. Solomon Asfaw & Silvio Daidone & Benjamin Davis & Josh Dewbre & Alessandro Romeo & Paul Winters & Katia Covarrubias & Habiba Djebbari, 2012. "Analytical Framework for Evaluating the Productive Impact of Cash Transfer Programmes on Household Behaviour – Methodological Guidelines for the From Protection to Production Project," Working Papers 101, International Policy Centre for Inclusive Growth.
    13. Timo Mitze & Alfredo R. Paloyo & Björn Alecke, 2015. "Is There a Purchase Limit on Regional Growth? A Quasi-experimental Evaluation of Investment Grants Using Matching Techniques," International Regional Science Review, , vol. 38(4), pages 388-412, October.
    14. Arpino, Bruno & Mealli, Fabrizia, 2011. "The specification of the propensity score in multilevel observational studies," Computational Statistics & Data Analysis, Elsevier, vol. 55(4), pages 1770-1780, April.
    15. Ruhose, Jens & Thomsen, Stephan L. & Weilage, Insa, 2018. "The Wider Benefits of Adult Learning: Work-Related Training and Social Capital," IZA Discussion Papers 11854, Institute of Labor Economics (IZA).
    16. Gevrek, Z. Eylem & Gevrek, Deniz & Neumeier, Christian, 2020. "Explaining the gender gaps in mathematics achievement and attitudes: The role of societal gender equality," Economics of Education Review, Elsevier, vol. 76(C).
    17. Cong Qin & Terence Tai Leung Chong, 2018. "Can Poverty be Alleviated in China?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(1), pages 192-212, March.
    18. Farrell, Max H., 2015. "Robust inference on average treatment effects with possibly more covariates than observations," Journal of Econometrics, Elsevier, vol. 189(1), pages 1-23.
    19. Dan Pan, 2014. "The Impact of Agricultural Extension on Farmer Nutrient Management Behavior in Chinese Rice Production: A Household-Level Analysis," Sustainability, MDPI, vol. 6(10), pages 1-22, September.
    20. Lee, Ying-Ying, 2018. "Efficient propensity score regression estimators of multivalued treatment effects for the treated," Journal of Econometrics, Elsevier, vol. 204(2), pages 207-222.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormsom:v:21:y:2019:i:2:p:290-307. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.