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Fraud on Mobile Financial Markets: Evidence from A Pilot Audit Study

Author

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  • Francis Annan

    (Columbia University, School of International and Public Affairs, 420 West 118th Street, New York, NY 10027, USA)

Abstract

Potential fraud can limit the promise of innovative mobile financial markets like Mobile Money, yet little is known about its existence, especially among the poor. In a randomized control trial across 6 low-income communities in Ghana, I evaluate the extent of fraud—overcharged transactions—on Mobile Money and explore the mechanisms underlying the results. Trained auditors visited vendor points, seeking to make actual Mobile Money transactions: either send or receive cash. Approximately 22% of transactions go fraudulent. Additional experiments indicate that fraud is higher for large amount transactions. Consumers who are financially sophisticated are less likely to suffer fraud, but market competition appears to have no effect on this.

Suggested Citation

  • Francis Annan, 2017. "Fraud on Mobile Financial Markets: Evidence from A Pilot Audit Study," Working Papers 17-16, NET Institute.
    • Handle: RePEc:net:wpaper:1716
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    References listed on IDEAS

    as
    1. Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all? : Policies and pitfalls in expanding access," Other publications TiSEM aec73d3a-d6eb-457f-9182-3, Tilburg University, School of Economics and Management.
    2. 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.
    3. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
    4. Demirguc-Kunt,Asli & Klapper,Leora & Singer,Dorothe & Van Oudheusden,Peter, 2015. "The Global Findex Database 2014 : measuring financial inclusion around the world," Policy Research Working Paper Series 7255, The World Bank.
    5. Sendhil Mullainathan & Markus Noeth & Antoinette Schoar, 2012. "The Market for Financial Advice: An Audit Study," NBER Working Papers 17929, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    mobile money; financial fraud; audit study;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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