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Mobile Money and Risk Sharing Against Aggregate Shocks

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Abstract

Households in developing countries have gained increased access to remittances through the recent introduction of mobile money services. While the benefits of improved risk sharing to the remittance receiver have been examined in past research, benefits to the wider community have not been looked into. I examine the impact of mobile money services on consumption smoothing after an aggregate shock for both users of mobile money and for household that don't use mobile money but who reside in villages with users. This allows me to determine the extent that remittances received via mobile money are shared within villages in which I cannot reject perfect risk sharing. Using a difference-in-difference fixed effects specication, I find that while having other mobile money users in the village increases the per capita consumption of the entire village, after an aggregate shock it is only users of mobile money who are able to prevent a drop in their consumption.

Suggested Citation

  • Emma Riley, 2016. "Mobile Money and Risk Sharing Against Aggregate Shocks," CSAE Working Paper Series 2016-16, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2016-16
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    File URL: https://ora.ox.ac.uk/objects/uuid:af4fa7d6-7bc1-48bb-8ff1-c8b2ee95f403
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    Cited by:

    1. Olukorede Abiona & Martin Foureaux Koppensteiner, 2022. "Financial Inclusion, Shocks, and Poverty: Evidence from the Expansion of Mobile Money in Tanzania," Journal of Human Resources, University of Wisconsin Press, vol. 57(2), pages 435-464.
    2. Melia, Elvis, 2019. "The impact of information and communication technologies on jobs in Africa: a literature review," IDOS Discussion Papers 3/2019, German Institute of Development and Sustainability (IDOS).
    3. Aron, Janine, "undated". "'Leapfrogging': a Survey of the Nature and Economic Implications of Mobile Money," INET Oxford Working Papers 2017-02, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, revised Jan 2017.
    4. Carlos Sakyi‐Nyarko & Ahmad Hassan Ahmad & Christopher J. Green, 2022. "The role of financial inclusion in improving household well‐being," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(8), pages 1606-1632, November.
    5. Ahmad Hassan Ahmad & Christopher Green & Fei Jiang, 2020. "Mobile Money, Financial Inclusion And Development: A Review With Reference To African Experience," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 753-792, September.
    6. Ablam Estel Apeti & Jean-Louis Combes & Eyah Denise Edoh, 2023. "Entrepreneurship in developing countries: can mobile money play a role?," Working Papers hal-04081304, HAL.
    7. Zhonggang Yue & Chong Wang & Hui Hong, 2025. "Inclusive development of digital finance, family entrepreneurship and poverty reduction effect," International Entrepreneurship and Management Journal, Springer, vol. 21(1), pages 1-28, December.

    More about this item

    Keywords

    risk sharing; mobile money; Tanzania;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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