Session 1: Researching Mobile Money

Janine Aron, leapfrogging: a survey of the nature and economic implications of mobile money
Janine Aron focused her presentation on financial inclusion, the role of big data, and the macroeconomic consequences of mobile money.

  • Mobile money is a recent financial innovation giving financial transaction services via a mobile phone, including to the unbanked global poor. Mobile money technology has spread rapidly in the developing world, “leapfrogging” the provision of formal banking services by solving the problems of weak institutional infrastructure and the cost structure of conventional banking. Her survey examines the evolution of mobile money, its important role in widening financial inclusion, and the impact of regulation on the development of mobile money systems. It explores the channels of economic influence of mobile money from both a micro and a macro perspective, and presents the first critical survey of the current state of micro and macro empirical literature on the economic impact of mobile money.Leapfrogging’: a Survey of the Nature and Economic Implications of Mobile Money: https://ideas.repec.org/p/csa/wpaper/2017-02.html

Billy Jack, Experimenting with mobile money: savings and credit
Billy Jack focused on the effects of mobile money on individual savings and credit behaviour. His main points:

  • In Kenya, the growth of M-PESA has greatly increased the number of individuals with access to formal financial products. Even without formal insurance products, M-PESA helps to spread risk. Without M-PESA, negative shocks reduce consumption by 7-10%. With M-PESA, shocks have no effect on consumption i.e M-PESA users are fully insured through transfer of support from social networks. This means that individuals can take more risky-higher profit investment decisions.
  • M-PESA helps banks to extend credit to high risk consumers by the threat of the dispossession of assets bought on credit.
  • Savings products can also be extended through mobile technology. Giving people SMS reminders and informing them about the role of savings products boosts savings rates.

Adam Mugume, Discussant
There is a need for central bankers to focus on macroeconomic effects. There is a key empirical question of whether mobile money influenced the money multiplier? Mobile money has the potential to influence consumption patterns which may influence inflation. However, transmission mechanisms unclear and the net effects are ambiguous.