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Cited by 1,435Microfinance and Financial InclusionEconomic Growth and DevelopmentFinTech, Crowdfunding, Digital Finance

Risk Sharing and Transactions Costs: Evidence from Kenya's Mobile Money Revolution

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Jack, William, Suri, Tavneet·2014·American Economic Review
DOI 10.1257/aer.104.1.183
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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. (JEL E42, G22, O16, O17, Z13)

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  • In developing countries, trust in digital banking is shaped by additional barriers such as weak regulatory frameworks, digital illiteracy, and prior experiences of fraud or financial exclusion.

    “In the context of developing countries, trust takes on unique characteristics due to the presence of additional barriers such as weak regulatory frameworks, digital illiteracy, and prior experiences of fraud or financial exclusion.”

    From Trust in digital banking: a thematic review of drivers, barriers and emerging evidence in developing countries (2025) · cites this paper as Jack & Suri, 2014

    The introduction and Conclusion discuss transaction costs and risk sharing through Kenya’s M-PESA, not what shapes trust in digital banking. A search for trust, weak regulation, digital illiteracy, fraud, and financial exclusion found no passage linking those barriers to trust. The discussion of M-PESA trust accounts in Section II concerns bank deposits, not customers’ trust. (LLM, conf=0.76)

    Experimental — accuracy not yet measured

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Cited by

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Authors
Jack, W., & Suri, T.
Affiliations
  • Georgetown University (US)
  • Massachusetts Institute of Technology (US)
Venue
American Economic Review
Publisher
American Economic Association
Published
2014-01-01
Volume
104
Issue
1
Pages
183-223
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/aer.104.1.183
OpenAlex
W2032874557
Cited by
1,435
References
1
Citations by year
2026: 273 · 2025: 195 · 2024: 149 · 2023: 137 · 2022: 173 · 2021: 132 · 2020: 110 · 2019: 71 · 2018: 59 · 2017: 42 · 2016: 45 · 2015: 27 · 2014: 11 · 2013: 5 · 2012: 3
FWCI
70.42
Type
journal article
Language
en
Open access
Locations
  • American Economic Review (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • DSpace@MIT (Massachusetts Institute of Technology) (submittedVersion, cc-by-nc)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Microfinance and Financial Inclusion
  • Physical Sciences › Computer Science › Information Systems › Economic Growth and Development
  • Social Sciences › Business, Management and Accounting › Management Information Systems › FinTech, Crowdfunding, Digital Finance
Keywords
mobile money, risk sharing, transaction costs, consumption, remittances, household shocks, mobile money agents, financial inclusion, Kenya

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