NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Mobile Banking: The Impact of M-Pesa in Kenya

Isaac Mbiti, David N. Weil


This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.

Chapter in forthcoming NBER book African Successes: Modernization and Development, Volume 3, Sebastian Edwards, Simon Johnson, and David N. Weil, editors
Forthcoming from University of Chicago Press
in African Successes Project

M-Pesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007. We examine how M-Pesa is used as well as its economic impacts. Analyzing data from two waves of individual data on financial access in Kenya, we find that increased use of M-Pesa lowers the propensity of people to use informal savings mechanisms such as ROSCAS, but raises the probability of their being banked. Using aggregate data, we calculate the velocity of M-Pesa at roughly four person-to-person transfers per month. In addition, we find that M-Pesa causes decreases in the prices of competing money transfer services such as Western Union. While we find little evidence that people use their M-Pesa accounts as a place to store wealth, our results suggest that M-Pesa improves individual outcomes by promoting banking and increasing transfers.

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This paper was revised on September 8, 2015

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This chapter first appeared as NBER working paper w17129, Mobile Banking: The Impact of M-Pesa in Kenya, Isaac Mbiti, David N. Weil
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