The Real Effects of Mobile Money: Evidence from a Large-Scale Fintech Expansion

July 24, 2020

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Format: Chicago

Manasa Patnam, and Weijia Yao. The Real Effects of Mobile Money: Evidence from a Large-Scale Fintech Expansion, (USA: International Monetary Fund, 2020) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Mobile money services have rapidly expanded across emerging and developing economies and enabled new ways through which households and firms can conduct payments, save and send remittances. We explore how mobile money use can impact economic outcomes in India using granular data on transactions from Paytm, one of the largest mobile money service provider in India with over 400 million users. We exploit the period around the demonetization policy, which prompted a surge in mobile money adoption, and analyze how mobile money affects traditional risk-sharing arrangements. Our main finding is that mobile money use increases the resilience to shocks by dampening the impact of rainfall shocks on nightlights-based economic activity and household consumption. We complement these findings by conducting a firm survey around a phased targeting intervention which incentivized firms to adopt the mobile payment technology. Our results suggest that firms adopting mobile payments improved their sales after six-months of use, compared to other firms. We also elicit firms’ subjective expectations on future sales and find mobile payment adoption to be associated with lower subjective uncertainty and greater sales optimism.

Subject: Banking, Currency reform, Fintech, Mobile banking, Mobile internet, Money, Technology

Keywords: Control firm, Control group firm, Currency reform, Economic activity, Fintech, Firm sale, Global, Mobile banking, Mobile internet, Payment technology, Rainfall shock, South Asia, Treatment firm, Treatment group firm, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/138
Stock No:

WPIEA2020138
ISBN:

9781513550244
ISSN:

1018-5941

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