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The Real Effects of Mobile Money: Evidence from a Large-Scale Fintech Expansion

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  • Manasa Patnam
  • Weijia Yao

Abstract

Mobile money services have rapidly expanded across emerging and developing economies and enabled new ways through which households and firms can conduct payments, save and send remittances. We explore how mobile money use can impact economic outcomes in India using granular data on transactions from Paytm, one of the largest mobile money service provider in India with over 400 million users. We exploit the period around the demonetization policy, which prompted a surge in mobile money adoption, and analyze how mobile money affects traditional risk-sharing arrangements. Our main finding is that mobile money use increases the resilience to shocks by dampening the impact of rainfall shocks on nightlights-based economic activity and household consumption. We complement these findings by conducting a firm survey around a phased targeting intervention which incentivized firms to adopt the mobile payment technology. Our results suggest that firms adopting mobile payments improved their sales after six-months of use, compared to other firms. We also elicit firms’ subjective expectations on future sales and find mobile payment adoption to be associated with lower subjective uncertainty and greater sales optimism.

Suggested Citation

  • Manasa Patnam & Weijia Yao, 2020. "The Real Effects of Mobile Money: Evidence from a Large-Scale Fintech Expansion," IMF Working Papers 2020/138, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/138
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    Citations

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    Cited by:

    1. Amin, Sakib Bin & Taghizadeh-Hesary, Farhad, 2023. "Tourism, sustainability, and the economy in Bangladesh: The innovation connection amidst Covid-19," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 153-167.
    2. Apeti, Ablam Estel & Edoh, Eyah Denise, 2023. "Tax revenue and mobile money in developing countries," Journal of Development Economics, Elsevier, vol. 161(C).
    3. Joël Cariolle & David A Carroll, 2020. "Digital Technologies for Small and Medium Enterprises and job creation in Sub-Saharan Africa," Working Papers hal-03004583, HAL.
    4. Durak, İsmail & Çi̇se, Sena Nur & Yazıcı, Selim, 2024. "Developing a financial technology (FinTech) adoption scale: A validity and reliability study," Research in International Business and Finance, Elsevier, vol. 70(PB).
    5. Apeti, Ablam Estel, 2023. "Household welfare in the digital age: Assessing the effect of mobile money on household consumption volatility in developing countries," World Development, Elsevier, vol. 161(C).
    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. Ablam Estel Apeti, 2022. "Household welfare in the digital age: Assessing the effect of mobile money on household consumption volatility in developing countries," Post-Print hal-03819779, HAL.

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