Mobile Banking: The Impact of M-Pesa in Kenya

57 Pages Posted: 20 Jun 2011 Last revised: 28 Mar 2015

See all articles by Isaac M. Mbiti

Isaac M. Mbiti

affiliation not provided to SSRN

David N. Weil

Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 2011

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.

Suggested Citation

Mbiti, Isaac M. and Weil, David Nathan, Mobile Banking: The Impact of M-Pesa in Kenya (June 2011). NBER Working Paper No. w17129. Available at SSRN: https://ssrn.com/abstract=1866089

Isaac M. Mbiti (Contact Author)

affiliation not provided to SSRN ( email )

David Nathan Weil

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-1754 (Phone)
401-863-1970 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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