NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Mobile Banking: The Impact of M-Pesa in Kenya

Isaac Mbiti, David N. Weil

NBER Working Paper No. 17129
Issued in June 2011
NBER Program(s):   ME

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 June 23, 2014

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Document Object Identifier (DOI): 10.3386/w17129

Forthcoming: Mobile Banking: The Impact of M-Pesa in Kenya, Isaac Mbiti, David N. Weil. in African Successes: Modernization and Development, Edwards, Johnson, and Weil. 2014

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