Does Mobile Money Affect Saving Behavior? Evidence from a Developing Country

Abstract

We investigate whether the use of mobile money can help individuals build savings to face predictable and unpredictable life events. Studying the case of Burkina Faso, we use hand-collected data from individual responses to a survey we designed and conducted between May and June 2014. Our main results show that, although using mobile money services has no impact on saving for predictable events, it increases the propensity of individuals to save for health emergencies. We also find evidence that using mobile money increases the propensity of disadvantaged groups such as rural, female, less educated individuals and individuals with irregular income to save for health emergencies. In our further investigations, we address the mechanisms underlying individual saving behavior. We find that safety and the possibility to transfer money within the sub-region associated with mobile money may be factors that increase the propensity of mobile money users to save for health emergencies. Overall, our results are in line with policymakers' agenda worldwide to increase financial outreach and improve financial inclusion by using mobile technologies.