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Mobile Banking: The Impact of M-Pesa in Kenya

  • Isaac Mbiti
  • David N. Weil

M-Pesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007. We 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, we find 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. Using aggregate data, we calculate the velocity of M-Pesa at roughly four person-to-person transfers per month. In addition, we find that M-Pesa causes decreases in the prices of competing money transfer services such as Western Union. While we find little evidence that people use their M-Pesa accounts as a place to store wealth, our results suggest that M-Pesa improves individual outcomes by promoting banking and increasing transfers.

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File URL: http://www.nber.org/papers/w17129.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17129.

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Date of creation: Jun 2011
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Publication status: Forthcoming: Mobile Banking: The Impact of M-Pesa in Kenya , Isaac Mbiti, David N. Weil. in African Successes: Modernization and Development , Edwards, Johnson, and Weil. 2015
Handle: RePEc:nbr:nberwo:17129
Note: ME
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  1. Edgar L. Feige, 2005. "The Theory And Measurement Of Cash Payments; A Case Study Of The Netherlands," Macroeconomics 0501025, EconWPA.
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  4. Esther Duflo & Michael Kremer & Jonathan Robinson, 2011. "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 101(6), pages 2350-90, October.
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  6. Spindt, Paul A, 1985. "Money Is What Money Does: Monetary Aggregation and the Equation of Exchange," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 175-204, February.
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