The Mobile Alternative to Banking: Patterns of Financial Transactions in Emerging Countries

This paper explores patterns of financial transactions at the individual level in order to establish the effects of mobile money’s usage in a variety of country case examples. Data from the Financial Inclusion Insights program was analyzed for Bangladesh, India, Kenya, Nigeria, Pakistan, Tanzania, and Uganda, to establish differences between individuals who use mobile money services and their non-user counterparts. This analysis builds on previous research into the household level effects of the widely popular M-PESA services in Kenya to see if financial transaction patterns can be replicated in other country data. Contrary to previous literature, m-money usership was not a consistent predictor of transaction frequency and transaction distance for the country cases where data was available. To examine m-money’s potential as a complement or substitute to formal banking, usage frequency of bank account services was regressed on m-money usership, which was interacted with personal bank account ownership. Findings suggest that m-money encouraged bank account usage in the country samples where m-money was less prevalent overall, and discouraged bank account usage in the country samples where it was more prevalent. Overall, this study finds considerable difference in the effects of mobile money by country, as well as discrepant effects when interacted with bank account ownership.