Transparency and Financial Inclusion: Experimental Evidence from Mobile Money

CentER Discussion Paper No. 2019-032

73 Pages Posted: 14 Nov 2019

See all articles by Patricio S. Dalton

Patricio S. Dalton

Tilburg University - Center for Economic Research (CentER)

Haki Pamuk

Tilburg University

Ravindra Ramrattan

Tilburg University

Daan van Soest

Tilburg University - CentER & Department of Economics

Burak Uras

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics

Date Written: November 6, 2019

Abstract

Electronic payment instruments have the potential to spur the transparency of business transactions and thereby reduce information frictions. We design a field experiment to understand whether e-payments facilitate the financial inclusion of SMEs in developing world and to study adoption barriers. We encourage a random sample of Kenyan merchants to adopt a new mobile-money payment instrument and find that the decision to adopt is hampered by the combination of information, know-how and seemingly small transaction costs barriers. In addition, we find that business owners who are more averse to transparency are more reluctant to adopt. Sixteen months after the intervention, we observe that treated firms have better access to finance in the form of mobile loans. The impact on financial access is more pronounced for smaller establishments, which also experience a considerable reduction in sales volatility. We conclude that e-payments can help un-collateralized firms become transparent and get financially integrated.

Keywords: SME Finance; Transparency; Payment Technology; Lipa Na M-Pesa

JEL Classification: D22, G00, G21, O33

Suggested Citation

Dalton, Patricio S. and Pamuk, Haki and Ramrattan, Ravindra and van Soest, Daan P. and Uras, Burak R., Transparency and Financial Inclusion: Experimental Evidence from Mobile Money (November 6, 2019). CentER Discussion Paper No. 2019-032. Available at SSRN: https://ssrn.com/abstract=3481667 or http://dx.doi.org/10.2139/ssrn.3481667

Patricio S. Dalton (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Haki Pamuk

Tilburg University ( email )

Ravindra Ramrattan

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Daan P. Van Soest

Tilburg University - CentER & Department of Economics ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 2072 (Phone)

Burak R. Uras

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
19
Abstract Views
119
PlumX Metrics