Published on November 10, 2022–Updated on November 10, 2022
Focus on research
Mobile money and household consumption volatility
Access to financial services plays an important role in household welfare, as it provides access to investment opportunities, savings, consumption smoothing, and insurance against unexpected shocks. In developing economies where formal financial services exclude nearly half of the population, the development of mobile cellular offers an exciting avenue to provide poor households with access to basic financial services through mobile money. In this study, we analyze the effect of this financial innovation, i.e., mobile money, on household consumption volatility. Our results show that mobile money reduces household consumption volatility. Finally, we identify financial inclusion and migrant remittances as potential major transmission channels.