IDEAS home Printed from
   My bibliography  Save this paper

E-Money and Deposit Insurance in Kenya


  • Defina, Ryan
  • Van Roosebeke, Bert
  • Manga, Paul


E-money is widespread in Kenya, especially through MPESA, a form of e-money stored on mobile phones and issued by Safaricom, a mobile network operator (MNO). Integration between the MPESA platform and the traditional banking system is increasing. Given the very high use-grade of MPESA throughout the population, it has reached critical importance in Kenya. In Kenya, e-money issuers must back their e-value with bank balances at commercial banks (float), through trust accounts. Deposit insurance does not cover a default of the e-money issuer. However, the Kenya Deposit Insurance Corporation aims at offering pass-through coverage in case of a default of the deposit-taking commercial bank holding the trust accounts. Pass-through coverage is confronted with a number of challenges, including regarding data on the identity of e-money users and their balances held. Also, the critical importance of MPESA raises questions as to how to deal with a potential default of the MNO and the role of deposit insurance in such a scenario. Looking forward, there is merit in further coordination amongst safety net participants as well as in the management of trust accounts and the strengthening of data-availability requirements to e-money issuers.

Suggested Citation

  • Defina, Ryan & Van Roosebeke, Bert & Manga, Paul, 2021. "E-Money and Deposit Insurance in Kenya," MPRA Paper 111007, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:111007

    Download full text from publisher

    File URL:
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. World Bank [WB], 2018. "The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution," Working Papers id:12735, eSocialSciences.
    2. Isaac Mbiti & David N. Weil, 2015. "Mobile Banking: The Impact of M-Pesa in Kenya," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 247-293, National Bureau of Economic Research, Inc.
    3. Van Roosebeke, Bert & Defina, Ryan, 2021. "Five Emerging Issues in Deposit Insurance," MPRA Paper 110713, University Library of Munich, Germany.
    4. Milford Bateman & Maren Duvendack & Nicholas Loubere, 2019. "Is fin-tech the new panacea for poverty alleviation and local development? Contesting Suri and Jack’s M-Pesa findings published in Science," Review of African Political Economy, Taylor & Francis Journals, vol. 46(161), pages 480-495, July.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Carlos Colao & Roman Kahanek, 2022. "Beneficiary Accounts: Challenges for Deposit Insurance Schemes," IADI Fintech Briefs 7, International Association of Deposit Insurers.
    2. Van Roosebeke, Bert & Defina, Ryan, 2021. "Central Bank Digital Currencies: The Motivation," MPRA Paper 111006, University Library of Munich, Germany.

    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. Seng, Kimty, 2021. "The mobile money’s poverty-reducing promise: Evidence from Cambodia," World Development Perspectives, Elsevier, vol. 22(C).
    2. Pascaline Dupas & Sarah Green & Anthony Keats & Jonathan Robinson, 2014. "Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 63-101, National Bureau of Economic Research, Inc.
    3. Simplice A. Asongu, 2014. "Knowledge Economy and Financial Sector Competition in African Countries," African Development Review, African Development Bank, vol. 26(2), pages 333-346, June.
    4. Nenubari John Ikue & John Sodipo & Samuel Zeb-Omoni & Onyinyechi Uche & Linus Enegesi & Ernest Taenyi & Edwin Ekuase & Mtomabari Simeon & Boma Alalibo, 2021. "Mobile money operations, financial inclusion and Socioeconomic factors in the Niger-Delta Region of Nigeria," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(5), pages 224-234, July.
    5. Christian Lambert Nguena, 2019. "Working Paper 323- Mobile Financial and Banking Services Development in Africa," Working Paper Series 2449, African Development Bank.
    6. Franklin Allen & Elena Carletti & Robert Cull & Jun QJ Qian & Lemma Senbet & Patricio Valenzuela, 2021. "Improving Access to Banking: Evidence from Kenya [A matter of experience? Understanding the decline in group lending]," Review of Finance, European Finance Association, vol. 25(2), pages 403-447.
    7. Thorsten Beck & Robert Cull, 2013. "Banking in Africa," CSAE Working Paper Series 2013-16, Centre for the Study of African Economies, University of Oxford.
    8. Beck, T.H.L. & Pamuk, H. & Uras, R.B. & Ramrattan, R., 2015. "Mobile Money, Trade Credit and Economic Development : Theory and Evidence," Other publications TiSEM 3d35ab30-05ef-4a31-8710-f, Tilburg University, School of Economics and Management.
    9. Simplice Asongu, 2015. "The impact of mobile phone penetration on African inequality," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 42(8), pages 706-716, August.
    10. Gutierrez, Eva & Singh, Sandeep, 2013. "What regulatory frameworks are more conducive to mobile banking ? empirical evidence from findex data," Policy Research Working Paper Series 6652, The World Bank.
    11. Eduardo Nakasone & Maximo Torero, 2016. "A text message away: ICTs as a tool to improve food security," Agricultural Economics, International Association of Agricultural Economists, vol. 47(S1), pages 49-59, November.
    12. Jean-Philippe Berrou & François Combarnous & Thomas Eekhout, 2017. "Les TIC : une réponse au défi du développement des micro et petites entreprises informelles en Afrique sub-saharienne ?," Working Papers hal-02148324, HAL.
    13. Haseeb Ahmed & Benjamin W. Cowan, 2019. "Mobile Money and Healthcare Use: Evidence from East Africa," NBER Working Papers 25669, National Bureau of Economic Research, Inc.
    14. Franklin Allen & Elena Carletti & Robert Cull & Jun Qian & Lemma Senbet & Patricio Valenzuela, 2014. "Resolving the African Financial Development Gap: Cross-Country Comparisons and a Within-Country Study of Kenya," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 13-62, National Bureau of Economic Research, Inc.
    15. Maëlle Della Peruta, 2015. "Mobile Money Adoption and Financial Inclusion Objectives: A Macroeconomic Approach through a Cluster Analysis," GREDEG Working Papers 2015-49, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    16. Bert Van Roosebeke & Ryan Defina, 2021. "Climate Change Fever: Can Deposit Insurers Stay Cool?," IADI Policy Briefs 5, International Association of Deposit Insurers.
    17. Pelletier, Adeline & Khavul, Susanna & Estrin, Saul, 2019. "Innovations in emerging markets: the case of mobile money," LSE Research Online Documents on Economics 101585, London School of Economics and Political Science, LSE Library.
    18. Ozili, Peterson K, 2020. "Contesting digital finance for the poor," MPRA Paper 101812, University Library of Munich, Germany.
    19. Florence Arestoff & Baptiste Venet, 2013. "Learning to walk before you run: Financial Behavior and mobile banking in Madagascar," Working Papers DT/2013/09, DIAL (Développement, Institutions et Mondialisation).
    20. Abdul Karim Kamara, 2024. "The Impact of Financial Inclusion on Economic Growth and Poverty Reduction: Empirical Evidence from sub-Saharan Africa," International Journal of Science and Business, IJSAB International, vol. 32(1), pages 16-33.

    More about this item


    deposit insurance; bank resolution;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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:pra:mprapa:111007. 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: Joachim Winter (email available below). General contact details of provider: .

    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.