Work

The Home Economics of E-Money: Velocity, Cash Management, and Discount Rates of M-Pesa Users

Year: 2013

Type: article

Abstract: We study the mobile phone-based money transfer system in Kenya. Based on aggregate data, we estimate that the velocity with which units of e-money are transferred among users is approximately four times per month, and that the average number of transfers undergone by a unit of e-money between its creation and destruction is approximately one. Most M-Pesa transactions are made by frequent users. Examination of data on withdrawals shows a high frequency of small withdrawals and no response to “notches” in the price schedule, indicating that many users seem to have high implicit discount rates.

Source: American Economic Review

DOI: 10.1257/aer.103.3.369

Authors: Isaac Mbiti, David N Weil

Institutions: Southern Methodist University, Brown University

Language: English

Topic: Microfinance and Financial Inclusion

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funder: Eunice Kennedy Shriver National Institute of Child Health and Human Development

Award: R24 Population Center Grant