IDEAS home Printed from https://ideas.repec.org/a/aea/aejapp/v13y2021i1p38-71.html
   My bibliography  Save this article

Poverty and Migration in the Digital Age: Experimental Evidence on Mobile Banking in Bangladesh

Author

Listed:
  • Jean N. Lee
  • Jonathan Morduch
  • Saravana Ravindran
  • Abu Shonchoy
  • Hassan Zaman

Abstract

Rapid urbanization is reshaping economies and intensifying spatial inequalities. In Bangladesh, we experimentally introduced mobile banking to very poor rural households and family members who had migrated to the city, testing whether mobile technology can reduce inequality by modernizing traditional ways to transfer money. One year later, for active mobile banking users, urban-to-rural remittances increased by 26 percent of the baseline mean. Rural consumption increased by 7.5 percent, and extreme poverty fell. Rural households borrowed less, saved more, sent additional migrants, and consumed more in the lean season. Urban migrants experienced less poverty and saved more but bore costs, reporting worse health.

Suggested Citation

  • Jean N. Lee & Jonathan Morduch & Saravana Ravindran & Abu Shonchoy & Hassan Zaman, 2021. "Poverty and Migration in the Digital Age: Experimental Evidence on Mobile Banking in Bangladesh," American Economic Journal: Applied Economics, American Economic Association, vol. 13(1), pages 38-71, January.
    • Handle: RePEc:aea:aejapp:v:13:y:2021:i:1:p:38-71
    DOI: 10.1257/app.20190067
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/app.20190067
    Download Restriction: no
    File URL: https://doi.org/10.3886/E112186V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/app.20190067.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/app.20190067.ds
    Download Restriction: no
    File URL: https://libkey.io/10.1257/app.20190067?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. Miriam Bruhn & David McKenzie, 2009. "In Pursuit of Balance: Randomization in Practice in Development Field Experiments," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 200-232, October.
    2. Gharad Bryan & Shyamal Chowdhury & Ahmed Mushfiq Mobarak, 2014. "Underinvestment in a Profitable Technology: The Case of Seasonal Migration in Bangladesh," Econometrica, Econometric Society, vol. 82(5), pages 1671-1748, September.
    3. 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.
    4. Gladys Lopez Acevedo & Raymond Robertson, 2016. "Stitches to Riches? Apparel Employment, Trade, and Economic Development in South Asia," Working Papers id:10650, eSocialSciences.
    5. Khandker, Shahidur R., 2012. "Seasonality of income and poverty in Bangladesh," Journal of Development Economics, Elsevier, vol. 97(2), pages 244-256.
    6. Peter Ellis & Mark Roberts, 2016. "Leveraging Urbanization in South Asia," World Bank Publications - Books, The World Bank Group, number 22549, December.
    7. Bauchet, Jonathan & Morduch, Jonathan & Ravi, Shamika, 2015. "Failure vs. displacement: Why an innovative anti-poverty program showed no net impact in South India," Journal of Development Economics, Elsevier, vol. 116(C), pages 1-16.
    8. Munyegera, Ggombe Kasim & Matsumoto, Tomoya, 2016. "Mobile Money, Remittances, and Household Welfare: Panel Evidence from Rural Uganda," World Development, Elsevier, vol. 79(C), pages 127-137.
    9. Jenny C. Aker & Isaac M. Mbiti, 2010. "Mobile Phones and Economic Development in Africa," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 207-232, Summer.
    10. Jenny C. Aker, 2010. "Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 46-59, July.
    11. Batista, Catia & Vicente, Pedro C., 2020. "Improving access to savings through mobile money: Experimental evidence from African smallholder farmers," World Development, Elsevier, vol. 129(C).
    12. Johannes Haushofer & Jeremy Shapiro, 2016. "The Short-term Impact of Unconditional Cash Transfers to the Poor: ExperimentalEvidence from Kenya," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1973-2042.
    13. Knight, John & Gunatilaka, Ramani, 2010. "Great Expectations? The Subjective Well-being of Rural-Urban Migrants in China," World Development, Elsevier, vol. 38(1), pages 113-124, January.
    14. Edwards, Sebastian & Johnson, Simon & Weil, David N. (ed.), 2016. "African Successes, Volume I," National Bureau of Economic Research Books, University of Chicago Press, number 9780226316222, December.
    15. Riley, Emma, 2018. "Mobile money and risk sharing against village shocks," Journal of Development Economics, Elsevier, vol. 135(C), pages 43-58.
    16. Mark Pickens, 2009. "Window on the Unbanked : Mobile Money in the Philippines," World Bank Publications - Reports 9488, The World Bank Group.
    17. Christopher Blattman & Stefan Dercon, 2018. "The Impacts of Industrial and Entrepreneurial Work on Income and Health: Experimental Evidence from Ethiopia," American Economic Journal: Applied Economics, American Economic Association, vol. 10(3), pages 1-38, July.
    18. Agha Ali Akram & Shyamal Chowdhury & Ahmed Mushfiq Mobarak, 2017. "Effects of Emigration on Rural Labor Markets," NBER Working Papers 23929, National Bureau of Economic Research, Inc.
    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. Lee, Jean N. & Morduch, Jonathan & Ravindran, Saravana & Shonchoy, Abu S., 2022. "Narrowing the gender gap in mobile banking," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 276-293.
    2. Abate, Gashaw T. & Abay, Kibrom A. & Chamberlin, Jordan & Kassim, Yumna & Spielman, David J. & Paul Jr Tabe-Ojong, Martin, 2023. "Digital tools and agricultural market transformation in Africa: Why are they not at scale yet, and what will it take to get there?," Food Policy, Elsevier, vol. 116(C).
    3. Miyajima, Ken, 2022. "Mobile phone ownership and welfare: Evidence from South Africa’s household survey," World Development, Elsevier, vol. 154(C).
    4. 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.
    5. Catia Batista & Sandra Sequeira & Pedro C. Vicente, 2022. "Closing the Gender Profit Gap?," Management Science, INFORMS, vol. 68(12), pages 8553-8567, December.
    6. Jenny Aker & Joel Cariolle, 2022. "The Use of Digital for Public Service Provision in Sub-Saharan Africa," Post-Print hal-03003899, HAL.
    7. Apeti, Ablam Estel, 2023. "Household welfare in the digital age: Assessing the effect of mobile money on household consumption volatility in developing countries," World Development, Elsevier, vol. 161(C).
    8. Gregory Mvogo & Christèle Gladisse Awounang Djouaka, 2022. "Effet du mobile money sur la résilience des ménages exerçant des activités génératrices de revenus au Cameroun," African Development Review, African Development Bank, vol. 34(4), pages 459-471, December.
    9. Ablam Estel Apeti, 2022. "Household welfare in the digital age: Assessing the effect of mobile money on household consumption volatility in developing countries," Post-Print hal-03819779, HAL.
    10. Djahini-Afawoubo, Dossè Mawussi & Couchoro, Mawuli Kodjovi & Atchi, Fambari Kokou, 2023. "Does mobile money contribute to reducing multidimensional poverty?," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    11. Islam,Asif Mohammed & Muzi,Silvia, 2020. "Mobile Money and Investment by Women Businesses in Sub-Saharan Africa," Policy Research Working Paper Series 9338, The World Bank.
    12. Yao, Becatien & Shanoyan, Aleksan & Schwab, Ben & Amanor-Boadu, Vincent, 2023. "The role of mobile money in household resilience: Evidence from Kenya," World Development, Elsevier, vol. 165(C).
    13. Francesco Billari & Valentina Rotondi & Jenny Trinitapoli, 2020. "Mobile phones, digital inequality, and fertility: Longitudinal evidence from Malawi," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 42(37), pages 1057-1096.
    14. Asif M. Islam & Silvia Muzi, 2022. "Does mobile money enable women-owned businesses to invest? Firm-level evidence from Sub-Saharan Africa," Small Business Economics, Springer, vol. 59(3), pages 1245-1271, October.
    15. Sekabira, Haruna & Qaim, Matin, 2016. "Mobile Money, Agricultural Marketing, and Off-Farm Income in Uganda," GlobalFood Discussion Papers 234998, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    16. Thomas Eekhout & Jean‐Philippe Berrou & François Combarnous, 2023. "Entrepreneurs' mobile phone appropriation and technical efficiency of informal firms in Dakar (Senegal)," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(6), pages 1429-1455, August.
    17. Olukorede Abiona & Martin Foureaux Koppensteiner, 2022. "Financial Inclusion, Shocks, and Poverty: Evidence from the Expansion of Mobile Money in Tanzania," Journal of Human Resources, University of Wisconsin Press, vol. 57(2), pages 435-464.
    18. N'dri, Lasme Mathieu & Kakinaka, Makoto, 2020. "Financial inclusion, mobile money, and individual welfare: The case of Burkina Faso," Telecommunications Policy, Elsevier, vol. 44(3).
    19. Johnen, Constantin & Musshoff, Oliver & Parlasca, Martin C., 2022. "Mobile Money Adoption in Kenya: The Role of Mobile Money Agents," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322294, Agricultural and Applied Economics Association.
    20. Matsuura,Masanori & Md Saiful Islam,Abu Hayat & Tauseef,Salauddin, 2023. "Mobile phone ownership, income diversification, and household welfare in rural Bangladesh," IDE Discussion Papers 875, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • 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
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

    Statistics

    Access and download statistics

    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:aea:aejapp:v:13:y:2021:i:1:p:38-71. 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: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.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.