Tavneet Suri’s research investigates more closely the remarkable rise of M-PESA, the mobile banking service that has spread rapidly across Kenya.
This project will further clarify the impact and influence of M-PESA. As only a small fraction of Kenyans are banked, and given the high costs of transferring money by non-bank means, M-PESA promises to deliver a wide range of financial and cash-management services to a broad swath of people. Until now, these services had been severely limited in their reach.
More than 30% of adult Kenyans now use M-PESA since its introduction in 2007. By employing simple SMS technology and the established communication network of the dominant cell phone company, Safaricom, M-PESA allows for significant sums of money to be stored in phone-based accounts and sent to other users around the country. Deposits and withdrawals can be made through “agents.”
In 2008, Suri helped to lead a survey of 3,000 households, almost half of which were M-PESA users and agents. Her CFSP research project follows up on that investigation with further surveys that inquire about a range of compelling issues.
Research Questions:
- What is the impact of the technology on savings behavior, consumption, risk smoothing, remittances and other financial decisions?
- How does M-PESA change the network of people with whom individuals interact with financially and their decisions about such things as internal migration?
- How has the use of technology spread over time and geographically? What determinants of adoption patterns can we isolate?
- How well do agents manage their cash inventories?
- More broadly, how important are financial intermediation services for individuals in a developing economy like Kenya’s?
Data Notes:
Survey Time Frame and Rounds:
- Start six-month interval surveys, (northern) Summer of 2009
- Second survey, January 2010
- Third Survey, July 2010
- Experimental component of survey, Fall 2009-Fall 2010
Modules:
- Households
- Agents
- Micro entrepreneurs
Survey size: 4,700 (3,600 households, 500 agents, and 600 micro entrepreneurs [300 assigned to the treatment and 300 to control]).
Sample: Households and agents from districts of Kenya with at least M-PESA agents as well as 600 micro entrepreneurs.
Intervention:
- Provide incentives for customers of M-PESA to accumulate savings on the M-PESA account by making payments comparable to markets rate of interest on balances held in the accounts and by subsidizing transaction costs of making deposits and withdrawals.
- Make payment reimbursing half of the transactions costs incurred, to more closely mimic conditions that might be present in a more competitive system.
Partners:
Safaricom
M-PESA
Financial Sector Deepening (FSD) Kenya
Status:
Completed