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Mobile Money and Risk Sharing Against Aggregate Shocks

Emma Riley

No 2016-16, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Households in developing countries have gained increased access to remittances through the recent introduction of mobile money services. While the benefits of improved risk sharing to the remittance receiver have been examined in past research, benefits to the wider community have not been looked into. I examine the impact of mobile money services on consumption smoothing after an aggregate shock for both users of mobile money and for household that don't use mobile money but who reside in villages with users. This allows me to determine the extent that remittances received via mobile money are shared within villages in which I cannot reject perfect risk sharing. Using a difference-in-difference fixed effects specication, I find that while having other mobile money users in the village increases the per capita consumption of the entire village, after an aggregate shock it is only users of mobile money who are able to prevent a drop in their consumption.

Keywords: risk sharing; mobile money; Tanzania (search for similar items in EconPapers)
JEL-codes: O16 O17 O33 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-mfd, nep-net and nep-pay
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