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Mobile Banking: The Impact of M-Pesa in Kenya

Isaac Mbiti and David Weil ()

No 17129, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: M-Pesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007. We examine how M-Pesa is used as well as its economic impacts. Analyzing data from two waves of individual data on financial access in Kenya, we find that increased use of M-Pesa lowers the propensity of people to use informal savings mechanisms such as ROSCAS, but raises the probability of their being banked. Using aggregate data, we calculate the velocity of M-Pesa at roughly four person-to-person transfers per month. In addition, we find that M-Pesa causes decreases in the prices of competing money transfer services such as Western Union. While we find little evidence that people use their M-Pesa accounts as a place to store wealth, our results suggest that M-Pesa improves individual outcomes by promoting banking and increasing transfers.

JEL-codes: E40 O16 O33 (search for similar items in EconPapers)
Date: 2011-06
New Economics Papers: this item is included in nep-afr, nep-mac and nep-mfd
Note: ME
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Published as Mobile Banking: The Impact of M-Pesa in Kenya , Isaac Mbiti, David N. Weil. in African Successes, Volume III: Modernization and Development , Edwards, Johnson, and Weil. 2016

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Chapter: Mobile Banking: The Impact of M-Pesa in Kenya (2015) Downloads
Working Paper: Mobile Banking: The Impact of M-Pesa in Kenya (2011) Downloads
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