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Electronic payment technology and business finance : A randomized, controlled trial with mobile money

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  • Dalton, Patricio

    (Tilburg University, School of Economics and Management)

  • van Soest, Daan

    (Tilburg University, School of Economics and Management)

  • Uras, Burak

    (Tilburg University, School of Economics and Management)

Abstract

We conducted a randomized, controlled trial with small- and medium-sized enterprises in Kenya to estimate the causal impact of an electronic payment (e-payment) technology on business finance. Using an encouragement design, we exogenously increased e-payment usage among a random subset of firms by relaxing adoption transaction costs and information barriers. Sixteen months after the intervention, we find that the e-payment technology increased access to mobile loans (in the number of loans as well as in the amount borrowed) by at least 50% (0.17 standard deviation), likely because of the reduction of information asymmetries brought by an increase in digital transactions. We find no effect of the e-payment technology on sales and profits, but we do find a reduction of sales volatility and precautionary investment, especially for smaller firms. This suggests that mobile loans help smaller firms cope with short-term negative shocks. We provide a stylized model of business finance that rationalizes these findings.
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Suggested Citation

  • Dalton, Patricio & van Soest, Daan & Uras, Burak, 2024. "Electronic payment technology and business finance : A randomized, controlled trial with mobile money," Other publications TiSEM a85169a4-253e-40a5-b46a-7, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:a85169a4-253e-40a5-b46a-78a59cece42d
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    Cited by:

    1. Carli, Francesco & Uras, Burak R., 2024. "E-money, risk-sharing, and welfare," European Economic Review, Elsevier, vol. 169(C).

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