Risk Sharing and Transactions Costs: Evidence from Kenya's Mobile Money Revolution
American Economic Review
vol. 104,
no. 1, January 2014
(pp. 183-223)
Abstract
We explore the impact of reduced transaction costs on risk sharing by estimating the effects of a mobile money innovation on consumption. In our panel sample, adoption of the innovation increased from 43 to 70 percent. We find that, while shocks reduce consumption by 7 percent for nonusers, the consumption of user households is unaffected. The mechanisms underlying these consumption effects are increases in remittances received and the diversity of senders. We report robustness checks supporting these results and use the four-fold expansion of the mobile money agent network as a source of exogenous variation in access to the innovation.Citation
Jack, William, and Tavneet Suri. 2014. "Risk Sharing and Transactions Costs: Evidence from Kenya's Mobile Money Revolution." American Economic Review, 104 (1): 183-223. DOI: 10.1257/aer.104.1.183Additional Materials
JEL Classification
- E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
- G22 Insurance; Insurance Companies; Actuarial Studies
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- Z13 Economic Sociology; Economic Anthropology; Social and Economic Stratification