Mobile Money and Financial Resilience: Overcoming Economic Shocks Through Digital Financial Technology

Abstract

Mobile money has been touted as an opportunity to step toward formal financial inclusion in developing countries around the world, especially for those traditionally financially excluded. To further understand the impact of mobile money on those who adopt it, this study conducts a three-part meta-analysis to test the relationship between mobile money and long-term financial behaviors. The first part of the meta-analysis summarizes previous studies on mobile money as it relates to saving, borrowing, and economic stability. The second part uses regression models to understand how mobile money is related to saving and borrowing propensity using nationally representative survey data from 9 countries with 60,375 individual observations. The third part analyzes additional variables relating to coping behaviors during financial crises, reinforcing findings from the regression models and past studies. Results suggest that having a mobile money account increases saving propensity by 21% and increases borrowing propensity by 10% on average. Beyond this, findings from this study suggest a positive relationship between saving stock and mobile money use as well as a positive relationship between the amount borrowed and mobile money use. The validity of these findings is solidified by mobile money users being 5.8% more likely to use formal coping mechanisms during financial crises when compared to non-mobile money users. From these findings in Africa, Asia, and the Caribbean, it is possible to hypothesize more broadly about the outcomes of mobile money as it relates to overcoming economic shocks. These findings are especially relevant given the recent use of mobile money to distribute stimulus funds during the COVID-19 pandemic.