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Mobile Money in Tanzania

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  • Nicholas Economides

    () (Stern School of Business, New York University, New York, New York 10012; Networks, Electronic Commerce and Telecommunications Institute, New York, New York 10012)

  • Przemyslaw Jeziorski

    () (Haas School of Business, University of California, Berkeley, Berkeley, California 94720)

Abstract

In developing countries, mobile telecom networks have emerged as major providers of financial services, bypassing the sparse retail networks of traditional banks. We analyze a large individual-level data set of mobile money transactions in Tanzania to provide evidence of the impact of mobile money on alleviating financial exclusion in developing countries. We identify three types of transactions: (i) money transfers to others, (ii) short-distance money self-transportation, and (iii) money storage for short to medium periods of time. We utilize a natural experiment of an unanticipated increase in transaction fees to identify the demand for these transactions. Using the demand estimates, we find that the willingness to pay to avoid walking with cash an extra kilometer (short-distance self-transportation) and to avoid storing money at home (money storage) for an extra day are 1.25% and 0.8% of an average transaction, respectively, which demonstrates that mobile money ameliorates significant amounts of crime-related risk. We explore the implications of these estimates for pricing and demonstrate the profitability of incentive-compatible price discrimination based on type of service, consumer location, and distance between transaction origin and destination. We show that differential pricing based on the features of a transaction delivers a Pareto improvement.

Suggested Citation

  • Nicholas Economides & Przemyslaw Jeziorski, 2017. "Mobile Money in Tanzania," Marketing Science, INFORMS, vol. 36(6), pages 815-837, November.
  • Handle: RePEc:inm:ormksc:v:36:y:2017:i:6:p:815-837
    DOI: 10.1287/mksc.2017.1027
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    Cited by:

    1. Mothobi, Onkokame & Grzybowski, Lukasz, 2017. "Infrastructure deficiencies and adoption of mobile money in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 40(C), pages 71-79.
    2. Dalton, Patricio & Pamuk, H. & Ramrattan, R. & van Soest, Daan & Uras, Burak, 2019. "Transparency and Financial Inclusion : Experimental Evidence from Mobile Money (revision of CentER DP 2018-042)," Discussion Paper 2019-032, Tilburg University, Center for Economic Research.
    3. Melia, Elvis, 2019. "The impact of information and communication technologies on jobs in Africa: a literature review," Discussion Papers 3/2019, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE).
    4. Carolina Mattsson, 2019. "Networks of monetary flow at native resolution," Papers 1910.05596, arXiv.org.
    5. Dalton, Patricio & Pamuk, Haki & Ramrattan, R. & van Soest, Daan & Uras, Burak, 2018. "Payment Technology Adoption and Finance : A Randomized-Controlled-Trial with SMEs," Discussion Paper 2018-042, Tilburg University, Center for Economic Research.
    6. Sunday C. Eze & Vera C. A. Chinedu-Eze & Clinton K. Okike & Adenike O. Bello, 2020. "Critical factors influencing the adoption of digital marketing devices by service-oriented micro-businesses in Nigeria: A thematic analysis approach," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-14, December.
    7. Sunday C. Eze & Vera C. A. Chinedu-Eze & Clinton K. Okike & Adenike O. Bello, 2020. "Factors influencing the use of e-learning facilities by students in a private Higher Education Institution (HEI) in a developing economy," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-15, December.
    8. Beck, Thorsten & Pamuk, Haki & Ramrattan, Ravindra & Uras, Burak R., 2018. "Payment instruments, finance and development," Journal of Development Economics, Elsevier, vol. 133(C), pages 162-186.
    9. Ahmad Hassan Ahmad & Christopher Green & Fei Jiang, 2020. "Mobile Money, Financial Inclusion And Development: A Review With Reference To African Experience," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 753-792, September.
    10. Dube, Thulani & Chummun, Bibi Zaheenah, 2019. "Mobile Money access and usage among the rural communities in Zimbabwe," MPRA Paper 97578, University Library of Munich, Germany, revised 05 Dec 2019.
    11. Siliang Tong & Xueming Luo & Bo Xu, 2020. "Personalized mobile marketing strategies," Journal of the Academy of Marketing Science, Springer, vol. 48(1), pages 64-78, January.

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