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Is Mobile Money Changing Rural Africa? Evidence from a Field Experiment

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  • Batista, Catia

    (Nova School of Business and Economics)

  • Vicente, Pedro C.

    (Nova School of Business and Economics)

Abstract

Rural areas in Sub-Saharan Africa are typically underserved by financial services. Mobile money brings a substantial reduction in the transaction costs of remittances. We follow the introduction of mobile money for the first time in rural villages of Mozambique using a randomized field experiment. We find that mobile money increased migration out of these villages, where we observe lower agricultural activity and investment. At the same time, remittances received and welfare of rural households increased, particularly when facing geo-referenced village-level floods and household-level idiosyncratic shocks. Our work suggests that mobile money can accelerate urbanization and structural change in Sub-Saharan Africa.

Suggested Citation

  • Batista, Catia & Vicente, Pedro C., 2023. "Is Mobile Money Changing Rural Africa? Evidence from a Field Experiment," IZA Discussion Papers 16101, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16101
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    Cited by:

    1. Erika Deserranno & Gianmarco León-Ciliotta & Firman Witoelar, 2021. "When Transparency Fails: Financial Incentives for Local Banking Agents in Indonesia," Working Papers 1233, Barcelona School of Economics.
    2. Catia Batista & Sandra Sequeira & Pedro C. Vicente, 2022. "Closing the Gender Profit Gap?," Management Science, INFORMS, vol. 68(12), pages 8553-8567, December.
    3. Grzybowski, Lukasz & Lindlacher, Valentin & Mothobi, Onkokame, 2023. "Mobile money and financial inclusion in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 65(C).
    4. Catia Batista & Pedro C. Vicente, 2020. "Adopting Mobile Money: Evidence from an Experiment in Rural Africa," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 594-598, May.
    5. Catia Batista & Julia Seither, 2019. "Aspirations, expectations, identities: behavioral constraints of micro-entrepreneurs," NOVAFRICA Working Paper Series wp1906, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    6. Giné, Xavier & Goldberg, Jessica, 2023. "Experience in financial decision-making: Field evidence from Malawi," Journal of Development Economics, Elsevier, vol. 161(C).
    7. Melain Modeste Senou & Denis Acclassato Houensou, 2024. "From expanding financial services to tackling poverty in West African Economic and Monetary Union: The accelerating role of mobile money," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(3), pages 1707-1737, April.
    8. Cátia Batista & Marcel Fafchamps & Pedro C Vicente, 2022. "Keep It Simple: A Field Experiment on Information Sharing among Strangers [Changing Saving and Investment Behavior: The Impact of Financial Literacy Training and Reminders on Micro-Businesses]," The World Bank Economic Review, World Bank, vol. 36(4), pages 857-888.
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    10. Parlasca, Martin & Johnen, Constantin & Qaim, Matin, 2021. "Use of Mobile Financial Services Among Farmers in Africa: Insights from Kenya," 2021 Conference, August 17-31, 2021, Virtual 315863, International Association of Agricultural Economists.

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    More about this item

    Keywords

    technology adoption; structural change; agriculture; investment; remittances; migration; mobile money; insurance; Mozambique; Africa;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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