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

Author(s)
Jack, William; Suri, Tavneet
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.

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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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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.
Date issued
2014-01
URI
http://hdl.handle.net/1721.1/88137
Department
Sloan School of Management
Journal
American Economic Review
Publisher
American Economic Association
Citation
Jack, William, and Tavneet Suri. “ Risk Sharing and Transactions Costs: Evidence from Kenya’s Mobile Money Revolution.” American Economic Review 104, no. 1 (January 2014): 183–223. © 2014 American Economic Association
Version: Final published version
ISSN
0002-8282
1944-7981

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