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M-payment use and remittances in developing countries: a theoretical analysis

Dominique Torre (), Eric Darmon () and Laetitia Chaix ()
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Eric Darmon: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique
Laetitia Chaix: GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique

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Abstract: Many developing countries are characterized by high levels of remittances and low levels of financial inclusion. In this context, introduction of M-payment services can be seen as a means of improving both financial inclusion and remittance levels. To our knowledge, M-payments and remittances so far have been studied separately; in this paper, we investigate their interplay by analyzing how domestic use of M-payment services alters individual remittance decisions, and thus impact on aggregate remittance flows and welfare. We consider a theoretical model which accounts for both the decision to send a remittance and the remittance receivers' use of that remittance. We find that M-payment use has a positive effect on aggregate remittance flows and also a favorable impact on welfare. However, we find that once introduced, the price of M-payment services can have unpredictable effects.

Keywords: mobile-payment; M-payment; remittance flows. (search for similar items in EconPapers)
Date: 2016
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Published in Revue d'économie industrielle , Éd. techniques et économiques ; De Boeck Université, 2016, L'économie numérique en question, 156, pp.159-183

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