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African Successes, Volume IIIModernization and Development$
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Sebastian Edwards, Simon Johnson, and David N. Weil

Print publication date: 2016

Print ISBN-13: 9780226315720

Published to Chicago Scholarship Online: May 2017

DOI: 10.7208/chicago/9780226315867.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 05 April 2020

Mobile Banking

Mobile Banking

The Impact of M-Pesa in Kenya

Chapter:
(p.247) 7 Mobile Banking
Source:
African Successes, Volume III
Author(s):

Isaac Mbiti

David N. Weil

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226315867.003.0007

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 between 11.0 and 14.6 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.

Keywords:   banking, financial deepening, mobile telephones, e-money, e-cash, velocity, Kenya, M-Pesa, mobile money

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