Mobile money: substitute or complement of informal and formal
financial mechanisms?
Evidence from Burkina Faso1
Serge Ky2, Clovis Rugemintwari and Alain Sauviat
Université de Limoges, LAPE, 5 rue Félix Eboué, 87031 Limoges Cedex, France
Preliminary draft: Please do not quote without permission from the authors
Abstract. Using a survey data conducted between May and June 2014 in Burkina Faso, we
explore the impact of mobile money as a substitute or complement of informal and formal
financial instruments. The results show that mobile money account may act as a substitute of
informal deposits mechanisms. Furthermore, we find that for individuals participating in informal
mechanisms, mobile money may increase their likelihood to make deposits using bank account.
We also find that the use of mobile money increases the likelihood to make deposits using bank
and credit union accounts for disadvantaged groups especially, female, those with irregular
income and less educated. In further investigations, we discuss mechanisms underlying these
results. Our findings show the cost, illiquidity and low quality related to formal financial
instruments, and the risk, illiquidity and the low quality of informal mechanisms as factors that
may lead individuals to use mobile money account to make their deposits. Given the low access
to formal finance in developing countries, our results taken together show how the increasing
adoption of mobile technologies may be an opportunity towards financial inclusion. (JEL
Classification C83, D14, G21, G23, O12)
Keywords: mobile money, savings, financial inclusion, sub-Saharan Africa, Burkina Faso
1
An earlier version of the paper was presented at the LAPE PhD seminars. We are grateful to Philippe Rous, Céline
Meslier, Emmanuelle Nys, and Leo Indra Wardhana for their helpful comments and suggestions. We also wish to
thank Dénis Ouédraogo and Jean-Paul Ouoba from the Institut National de la Statistique et de la Démographie du
Burkina Faso for providing us data on access to financial services in Burkina Faso. All remaining errors are naturally
ours.
2
Corresponding Author. Tel: + 33 5 55 14 92 51. E-mail address : [email protected]
1
1. Introduction
Well-functioning financial systems serve a vital purpose, offering savings, credit,
payment and risk management products to people with a wide range of needs (Demirgüç-Kunt
and Klapper 2012). The financial services needs of lower-income people in Africa, which have
long been excluded from the formal finance, have receive more attention from governments,
international organizations and even bank institutions. Several initiatives have been implemented
such as microfinance and post offices or credit unions as suppliers of basic bank services to
increase people access to formal finance. It is argued that the benefit of formal finance for poor
households is that it helps build household resilience by enabling household anticipate, adapt to
and/or recover from the effects of shocks in a manner that protects their livelihoods, reduces
chronic vulnerability and facilitates growth (Gash and Gray, 2015). However, access to formal
financial institutions remained very low in Sub-Saharan Africa. The low network of formal
financial institutions and the location of retails outlets in urban area, the importance of population
density are some factors among others that explained why poor people living far from financial
institutions are less likely to access and use formal financial services (Allen et al., 2014; Beck,
Demirgüç-Kunt and Honohan, 2009; Demirgüç-Kunt and Klapper, 2012; Dermish et al., 2012).
For developing countries, financial development and deepening are likely to have
important implications for economic growth and the effectiveness of monetary policy (Carpenter
and Jensen, 2002). There is a massive effort underway to harness technology to overcome
barriers that prevent poor people to access banking services. In this way, branchless banking3,
especially mobile money is particularly prominent to potentially improve financial inclusion.
Mobile money services are qualified as “semi-formal” as providers of this type of financial
services are sometimes not registered and in general not supervised by the financial sector
supervisors (De Koker and Jentzsch, 2013; Shem, Misati and Njoroge, 2012). In this regard, the
development challenge in promoting formal financial access lies in the design of financial
technology that can be accessible to meet the need of the unbanked population.
In this article, we empirically test the hypothesis that the use of mobile money may act as
a complement or a substitute of informal and/or formal financial instruments. Formal financial
3
Branchless banking refers to new distribution channels that allow financial institutions and other commercial actors
to offer financial services outside traditional bank premises (Dermish et al. 2012).
2
instruments refer to bank accounts and credit union accounts while informal instruments refer to
rotating savings and credit associations (ROSCA), savings at home or under mattress, with a
neighbor or in livestock. In developing countries, individuals usually integrate a variety of
deposit instruments into their deposits/savings portfolios to meet their financial needs including
informal and formal instruments. However, informal deposit mechanisms despite meeting some
specific goals of individuals remain risky as it refer to financial services that are rendered outside
of the scope of the formally regulated and supervised financial services sector (De Koker and
Jentzsch, 2013).
The existence of an extensive population involving in informal deposit mechanisms
represents an important opportunity for formal financial intermediaries. In this regard,
microfinance institutions as well as credit unions, post banks and cooperatives play a prominent
role in Burkina Faso by providing individuals with access to savings and credit and also
contribute to the reduction of poverty (Thieba 2013). The development strategies of microfinance
institutions entail the reduction of the gap in access to formal financial services between urban
and rural areas with the priority to reach first women. Thus, microfinance institutions appear as a
substitute of bank institutions particularly for people without access to basic formal financial
services and individuals located in remote areas. The formal financial services are subject to
laws, regulations and prudential supervision and provide some additional advantages for both
individuals and economy. Promoting inclusive finance is critical to enhance efficiency and
welfare by facilitating access to an appropriate formal financial services by poor individuals
(Sarma and Pais, 2011). It is well known that financial development or inclusive financial system
requires a transition from the informal to the formal finance. New technologies can particularly
help to solve problems arising from weak institutional infrastructure (Klein and Mayer, 2011).
Therefore, mobile money can play this key role by providing avenues for secure and safe deposit
practices and by facilitating access and usage of a whole range of formal financial services.
The innovation of mobile technology refers to the use of mobile phone to perform
financial transactions as well as remittances, pay bills, purchase goods and services, and also
allows individuals to store value through cash in and cash out functions. In developing countries
where access to financial services are very limited the adoption of mobile money appears as an
alternative to formal financial services for unbanked especially disadvantaged individuals.
3
Mobile money not only reduces transactions costs but also greatly increases individuals
convenience for cash deposits and withdrawals, and minimize the need of costly physical
infrastructure as well as branch networks (Kendall, Schiff, and Smadja 2014). There are many
actors in partnership with licensed banks involved in the supply of mobile money services such as
mobile operators (M-Pesa in Kenya and Tanzania), M-payment or electronic money issuer
(WIZZIT in South Africa, Eko in India) (Mas 2009). This is similar in Burkina Faso where the
providers of mobile money services include licensed commercial banks4 in partnership with
mobile operators (M-Ligdi and Mobi-Cash), and electronic money (e-money) issuers (Inovapay).
The success of mobile money also relies on retail networks or mobile money agents that interact
with mobile money providers and also guarantee the conversion of cash into electronic money
and vice versa for customers. Thus, the widespread of mobile money agents is hence essential for
mobile money users to have convenient access to cash in/out options, and particularly held
sufficient liquidity or e-money to ensure the efficiency of the conversion between e-money and
cash.
A substantial amount of research mainly focuses on the potential implications of mobile
money for financial development in developing countries but little investigate empirically its
impact on existing informal and/or formal financial services. Dermish et al. (2012) argues that
branchless banking takes the advantage of increasingly mobile networks to bring banking
services into every day retails stores, thereby alleviating the lack of banking infrastructure in the
area where poor people live and work. Mobile money has the potential to enhance the
relationship between banks and their clients as customers can guide banks to what their needs are.
This may in return allow banks to provide them the right formal financial products (Mas, 2012).
Indeed, mobile money allows the excluded from formal financial system to perform financial
transactions relatively cheaply, securely and reliably (Demirguc-kunt and Klapper, 2012;
Dermish et al., 2012; Mbiti and Weil, 2011). In this perspective, mobile money can be considered
as a stepping stone to formal financial services by increasing the likelihood of individuals to use
formal deposit accounts. Mbiti and Weil (2011) show that M-PESA adoption in Kenya reduces
monetary and security costs of transferring money compared to traditional tools of money
transfers such as Western Union, MoneyGram or transport companies. They also show how M4
The Central Bank (BCEAO) provides agreement to only financial institutions (commercial banks, e-money issuers)
and supervised e-money activities. The compensation of e-money is necessarily held by the commercial banks.
4
PESA serves as a storage of value by decreasing the use of informal saving mechanisms such as
ROSCA. Morawczynski (2009) in a fieldwork in Kenya describes how M-PESA acts as a
complement rather than a substitute to other deposit/saving mechanisms such as banks, home
bank and ROSCA. In the same vein, Morawczynski and Pickens (2009) also argue analytically
that individuals use M-PESA as a substitute for informal methods of savings, especially keeping
money at home. By contrast, De Koker and Jentzsch (2013) who use household surveys
conducted in eight African countries find that holding a bank account is not negatively associated
with the probability of using informal finance. More specifically, they show that an increase in
the access to formal financial services including usage of mobile banking for receipt of salary or
income payments has not resulted in a reduction of usage of informal financial services such as
membership of cooperatives or informal employment.
Our paper contributes to the existing literature in two main ways. First, we examine the
potential of mobile money to enhance formal financial access as a channel that brings out
individuals from informal to formal deposit mechanisms. Specifically, we test the capacity of
mobile money to increase the likelihood of individuals participating in informal financial
mechanisms to use formal financial instruments to make deposits, bank and credit union accounts
more precisely. Second, it is well documented that the unbanked are more likely to be individuals
with low and irregular incomes, those who live in rural area far from formal financial institutions,
and socially excluded like female and less educated. As these categories of individuals are more
likely to participate in informal deposit mechanisms, we analyze whether mobile money increases
their likelihood to use formal deposit instruments. Hence, we test empirically the effect of the use
of mobile money on their likelihood to make deposit in formal institutions as well as bank
account and credit union account. Deposits or savings can help smooth low and irregular income
patterns and meet individuals spending objectives such as school fees and health expenses. For
people who make deposits through informal methods, money security can become a challenge
and the need for the safety offered by formal financial institutions becomes stronger. As mobile
money provides individuals with an electronic account that allows them to free deposit money as
savings, it can be seen as a stable springboard from which to begin the path to formal financial
inclusion.
5
The paper is organized as follows. In section 2 we present the research framework. Section 3
provides background on mobile money adoption and financial access in Burkina Faso, and also
describes our data collection and summary statistics. Section 4 displays our methodology and this
with the econometric results in section 5. In section 6 we discuss the potential mechanisms that
support our results and we conclude in section 7.
2. Research questions
According to the existent literature, mobile money can foster financial inclusion by
improving population access to basic formal financial services. The changes may not only stem
from the way individuals conduct their financial transactions such as remittances but also in their
choices of deposit methods. Nevertheless, these effects may also depend on individuals’
socioeconomic characteristics (level and type of income, location, gender, and education level)
and their perception of the myriad financial instruments available.
2.1.The technology of mobile money and usage of formal and informal saving
instruments
People save or make deposits for different reasons such as insurance against emergencies,
investment, social obligation and derive ingenious, often costly, saving mechanisms. Individuals
are very strategic when cultivating their savings portfolios as a wide range of deposit instruments
ranked from informal, semi-formal to formal financial instruments are available to them
(Carpenter and Jensen, 2002; Morawczynski, 2009; Robinson and Wright, 2001). The new
technology of mobile money that is considered as a new channel to provide financial services
may play a key role in the choice of deposit instruments that people made. In fact, Porteous
(2006) distinguishes two ways through which mobile money affects the usage of existent
financial services called the additive model indicating the usage of mobile phone as another
channel to access an existing formal account and the transformative model that entails the use of
mobile phone by the excluded from the formal financial system to access formal financial
products (Demombynes and Thegeya, 2012; Porteous, 2006). It is important to understand and
6
identify the behavior of individuals toward different deposit instruments in order to formulate
policies for enhancing formal financial inclusion and reduce poverty.
2.1.1. Additive model of mobile money (Complementarity)
A strong formal financial system is essential to provide individuals with deposit
instruments that allow them to smooth income and consumption over time and make efficient
investments in health, education and business. Formal financial services refer generally to some
basic services including lending facilities, savings facilities, payment and remittances services as
it represent an important source of income for many individuals in developing countries. The
institutions involving in formal financial sector differ from countries and consist of banks, post
banks, credit union, and insurance companies and are subject to laws, regulations and prudential
supervision (Demirgüç-kunt and Levine 2008; De Koker and Jentzsch 2013; Pande et al. 2012).
The agreement between formal financial institutions and their customers are typically governed
by formal written contracts, often in the form of standard agreements and are, at least
theoretically, enforceable in court.
The additive model of mobile money that refers to the access to an existent formal
financial account especially bank account via mobile phone beyond basic money storage and
transfers imply that individuals may use mobile money in addition to traditional financial
services. It is well known that individuals with high and regular income, located in urban area
where banks are concentrated, male and high educated individuals are more likely to access
formal institutions compared to disadvantaged people with low and irregular income, located in
rural area, female and less educated (Allan, Massu, and Svarer 2013; Demirgüç-Kunt, Klapper,
and Singer 2013; Karlan, Ratan, and Zinman 2014; Ky, Rugemintwari, and Sauviat 2015;
Morawczynski 2009; Triki and Faye 2013). In our case, the model of mobile money allows
already banked individuals to make some transactions between their mobile money account and
their banking account which may increase their likelihood to make deposit in formal financial
institutions. In this context mobile money account appears to serve as a complement of formal
deposit account especially for individuals with high and regular income, located in urban area,
male and high educated individuals. However, this impact may lessen for deposit in credit union
institutions, as there is no link between the mobile money account and credit union account.
7
Moreover, credit union institutions are used as an alternative to bank institutions for
disadvantaged individuals or those in remote areas. Then, the use mobile money may appear as a
complement of credit union institutions. Morawczynski (2009) in a fieldwork shows that some
individuals may not use mobile money as a deposit/saving account because they already access
and use other deposit mechanisms that meet their needs. In addition, some banked individuals
find mobile money account not appropriate for big deposit/savings, and others may want to build
a relationship with the bank institution to access credit in the future. Thus, it effects may be lesser
or null on the behavior of individuals who already have access to formal deposit account. Several
studies document that accessing formal financial instruments help individuals to make more
deposits and securely, increased their productive investment, private expenditures and allow them
to build a relationship with banks to access credit in the future (Dermish et al., 2012; Dupas and
Robinson, 2013; Morawczynski, 2009; Shem, Misati and Njoroge, 2012). Therefore, increasing
individuals’ access to mobile money may help individuals build strong resilience by providing
them with more secure means of deposits and enhance their livelihoods strategies.
The additive model can be extended to the use mobile money account in addition to informal
saving mechanisms. In fact, several studies show that individuals use a combination of a variety
of deposit mechanisms to manage their income and to meet their financial needs (Carpenter and
Jensen 2002; Gash and Gray 2015; Kendall 2010; De Koker and Jentzsch 2013; Morawczynski
2009). The usage of mobile money as a deposit instrument seems to depend on the degree of
commitment it provides. As informal deposit mechanisms are illiquid, individuals participating in
informal financial mechanisms may additionally use mobile money that is more liquid and seems
to be convenient for short term deposit and appropriate to face unpredictable life events.
Therefore, one may consider mobile money as a complement of informal financial mechanisms
that are illiquid and may be appropriate for long term deposit.
2.1.2. Transformative model of mobile money (Substitutability)
Less than a quarter of adults in Sub-Saharan of Africa have access to formal financial
services (International Finance Corporation, 2013). The frequent reasons cited for not using
formal financial services include the lack of enough money, the fixed fees and high costs of
opening and maintaining accounts, distance and insufficient documentation (Beck, Demirguc8
Kunt and Martinez Peria, 2008; Demirgüç-Kunt and Klapper, 2012; Honohan and Beck, 2007;
Kendall, 2010; Mas, 2010). Thus, disadvantaged individuals who do not access formal financial
services are more likely to be poor with unpredictable income, located far from formal financial
institutions, female and with low level of education. In fact, poor people have access, if any, only
to informal financial services to manage their finances. For instance, they stashes cash at home or
under matrass, leaving money with a trusted neighbor, loaning funds to relatives or build assets as
buying livestock, jewels. Some individuals pay deposit collectors to collect their deposits or
deposit their money with local money-lenders. Others voluntarily form groups of saving such as
rotating saving and credit associations (ROSCA) that meet at regular intervals and that allow
members living or working near each other to lend their deposit to each other on a rotating basis
and where each member makes sure that the other make deposit or contribute to the pot. Indeed,
it is argued that even individuals who already access and use formal financial services continues
to participate in informal mechanisms (De Koker and Jentzsch, 2013). However, these diversity
of informal deposit mechanisms are very risky, illiquid and inappropriate. In the case of
participating in ROSCA as the order of receipt is typically determined in advance, it is difficult to
get deposits when more than one member has specific needs. The connection between depositors
may renders the saving group vulnerable to shocks affecting local region or workers causing
members default and threaten the solvency of the saving group. In addition, many rotating saving
groups are functioning outside the scope of the formally regulated and supervised financial
system. They involve local tradition as well as mutual trust that members reciprocally place in
each other and the agreements underlying these mechanisms are generally verbal and in the case
of breach of the agreement, enforcement is informal.
In this situation, the transformative model of mobile money entails the usage of mobile
money account rather than informal mechanisms because it appears to have the potential to solve
these problems. Therefore, we assume that disadvantaged individuals may use mobile money as a
substitute of informal deposit mechanisms because mobile money is personal, allows individuals
to access a safe deposit without a required minimum balance, to perform financial transactions at
relative low costs and more securely.
By giving banks and financial services providers a cheap way to outsource cash handling,
deposit and withdrawal transactions, mobile money can allow to serve individuals at lower costs,
9
securely and nearby them (Kendall et al., 2011). In fact, as the issuers of mobile money services
are licensed banks, there is a strong link to the traditional financial system (Ramada-Sarasola,
2012). Thus, the mobile money is fully embedded within the traditional banking services sector
although the mobile money account is managed by a third party; usually mobile network
operators. As in developing countries the formal financial sector such as banks and credit unions
remains underdeveloped and linked to a small network of branches, individuals may use mobile
money account as a deposit instrument even though it is initially designed for transfers and
payments and does not pay interest. In this vein, we suppose that mobile technology can also
appear as a substitute of formal deposit instruments especially bank and credit union accounts for
disadvantaged individuals.
Individuals in less developed countries, who experience frequent economic need a secure
and convenient way to accumulate sums of cash to invest in their micro-enterprises, pay for
school fees, or finance major life and also need to hold “precautionary” deposits to ensure that
unexpected shocks like health emergency or job loss do not push them deeper in poverty
(Radcliffe and Voorhies, 2012). The rapid adoption of mobile money and its relative advantages
compared to the informal and formal financial mechanisms raise the following questions that our
paper aims to investigate:
1) Do individuals use mobile money account as a substitute or a complement of existing informal
and formal deposit instruments?
2) Can mobile money increase access to formal financial deposit instruments (bank and/or credit
union accounts)? To what extent excluded people may benefit from this innovation of mobile
money technology?
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3. Financial access strands and data collection
3.1.Background on mobile money, formal and informal savings in Burkina Faso
Burkina Faso is one of the poorest countries in Sub-Saharan Africa, with a GDP per capita at
around 761 USD and with 44.6 percent of the population living on less than $2/day international
poverty line. Access to formal financial services, as in most low-income countries in developing
countries, remains limited. In fact, formal, semi-formal and informal financial mechanisms coexist in the country. While growing, the formal and semi-formal5 system remains largely
dominated by the informal sector as most of the population access financial services from it
(Gash and Gray, 2015). The formal financial sector is still in its infancy and comprised of 13
commercial banks, and 4 financial society including insurance, lending and leasing institutions.
The network of bank branches consists of around 244 branches and 305 ATM (BCEAO 2014) are
concentrated urban areas and more interested by individuals with high and regular income than
poor individuals as it is costly to collect their small and irregular income through physical
infrastructure (Dermish et al. 2012).
In this context, microfinance institutions or decentralized financial system (DFS) including
credit union, post office and cooperatives play an important role in providing financial services
such as saving accounts, loans, insurances and financial transactions including payments, pensions and
money transfers. They dominate the banking sector in mobilizing individual savings and reaching
the excluded population from the banking sector especially small/medium enterprises and
disadvantaged individuals with tools of deposit and facilities to access credit (Gash and Gray
2015; Nair and Kloeppinger-Todd 2007; Thieba 2013). There is around 64 decentralized financial
system6 with 285 main agencies and 349 sub-agencies throughout the country (AP/SFD-BF,
2014). All these formal financial institutions (banks and decentralized financial institutions) are
monitored and supervised by the Central Bank (BCEAO) and the Ministry of Economics and
Finances through State Treasury. According to the Global Financial Inclusion Database7 (2015),
while 51% the population report saved in the past years, around 13% have an account at a formal
5
Semi-formal or non-formal system includes informal savings groups that are supported by non-governmental
organizations.
6
These data include RCPB (le Réseau des Caisses Populaires du Burkina Faso), a credit union that provides formal
financial services that cover all the 45 provinces of the country with 185 counters in 2013. For more details, see the
site web: www.rcpb.bf.
7
The data are collected for the year 2014 by the Global Financial Inclusion Database.
11
financial institutions. It also reports that 9% of the population save in a formal financial institutions
compared to 18% that save using a savings club or a person outside the family. These reports illustrate
the predominance of the informal savings mechanisms in the country.
Financial exclusion can be defined as a process serving as an obstacle to a social category of the
population to have access to formal financial services (Conroy 2005; Mohan 2006). It reflects the lack of
access of disadvantaged people to appropriate services and formal financial products at low costs, safely
and securely. The failure or inequality of access to formal financial services occurs in the country
because the informal sector, although risky, remained the main channel through which the majority of
population made deposits. The informal deposit/saving mechanisms consist of deposits at home,
accumulate jewelry or livestock, pay deposit collectors, deposit money with local money-lender and/or
participating in a rotating savings and credit associations (ROSCAs). The predominance of informal
mechanisms in collecting deposits is an important indicator of the inefficiency of formal finance
institutions to reach the financial needs of the population. Consideration such as gender, geographic
isolation or low population density, documentation, and the costs and fees of formal financial services
play an important role in explaining the low access in the country, Burkina Faso, with limited formal
financial sector development.
To promote financial inclusion in the countries members of WAEMU, then in Burkina Faso, the
BCEAO cheer several initiatives on the issue of electronic money to take advantage of the opportunities
of new technologies. These initiatives include internet banking, prepaid card, and in particular the
mobile money to increase competitiveness in the banking sector. Mobile money have the advantage to
lower costs of transactions, to be accessible anywhere throughout the country and benefit from a large
network of mobile money agents for cash in/out services. Thus, the Central Bank allows the entrance in
the banking system of new players such as issuers of electronic money and especially mobile network
operators that can offer mobile money services in partnership with banks. Since the launch of mobile
money, the takeoff remained modest around 5% of the adult population and can be explain by the idea
of Mas and Porteous (2015) that the usage of new platforms as mobile money can accelerate
dramatically but rapid takeoff may not be the norm and overcoming customer caution and resistance to
change will take patience and experimentation. Hence, access to and usage of mobile money may help
fill the gap in the access to more formal deposit instruments.
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Table 1. Comparison of formal and informal mechanisms and mobile money (in Burkina
Faso)
Motivations or
reasons
Formal Institutions (Banks
and DFS)
Access
Literacy required. No one is
excluded,
no
formal
restrictions.
Risk
Formal deposit guarantee
prohibited. Some episodes of
failure remained in the mind
of individuals
Transactions
costs, fees
High costs of transactions.
Withdrawals are charged
according to the amount but
deposits are free of charge
Liquidity
Aside long distance, funds
may be withdrawn and
deposited at agencies
Quality
Account is personal, deposits
decision are made on
individual basis. Can be used
for predictable purposes and
in a less manner for
unpredictable events
Mobile Money
Informal mechanisms
No education level required, but
knowledge on the use of mobile
phone
is
necessary.
No
restrictions
Group exist everywhere, but are often
stratified by gender, ethnic grouping,
religion or social status. There may be
screening, so groups do not take on risky
members. For instance, those with
irregular incomes might be excluded. No
education level required.
Formal
deposit
guarantee
prohibited. All the cash in
exchange for electronic money is
held by the bank. Sometimes
network problem
Relative small fees. Withdrawals,
money transfers and payments,
are charged (relatively low) but
deposits are free of charge
Funds may be withdrawn and
deposited at the near mobile
money agents or respective banks
agencies/Constraint to agent cash
or e-money shortage
Account is personal, deposits
decision are made on individual
basis. Can be used
for
unpredictable purposes
Members are subject to disband without
warning; they are also subject to
covariant risks, then large shocks could
cause default of the group.
No fees. Contributions and receiving the
pot are made on the basis of meeting).
But, there is some high fees to move
ahead in the queue.
Typically, order of payout is fixed. It is
difficult for individuals to move ahead in
the queue (when more than one member
face emergencies)
Basis on social relationship, share
problem with others. Development of
community-level
solidarity,
Social
pressure to make regular deposits. Can be
used for predictable purpose and in a
lesser manner for unpredictable events
Source: Authors’ analysis. DFS refers to Decentralized Financial System or Microfinance institutions.
3.2.Data collection and summary statistics
Data collection
We apply our hand-collected data from our survey8 that we designed and conducted in
May 2014 that consist of 500 randomly selected individuals across the central region in Burkina
Faso. The target population include 50% of users and 50% of non-users of mobile money and
allow us to capture the impact of mobile money on the choice of deposit/saving instrument made
by users compared to non-users.
8
For more details about the survey and data collection, see (Ky, Rugemintwari and Sauviat, 2015)
13
Summary statistics
In our sample, descriptive analysis (Table 2) of the choice of savings instruments9 reveals
that among individuals that report saved, 46% using credit union, 44% participate in informal
saving mechanisms, 39% used bank account and 17% used mobile money account. Regarding
individuals that report saved, there is about 49% of female and 51% of male, 52% of rural and
48% of urban, 43% of less educated and 57% of high educated, and 46% of low income and 54%
of high income. Considering the motivations of savings, the report shows that individuals saved
first for health emergencies with 82%, follow by 49% for developing an activity, 46% for a
decrease of income, 33% for education expenditures, 24% for ceremonies (wedding, funerals)
and 14% to reimburse a loan. Among individuals that participate in informal mechanisms, about
66% are female, 61% are located in urban area and 83% have a paid activity. Looking at,
respectively, individuals saving with bank and those saving with credit union, 42% against 52%
are female, 43% against 53% are rural and 82% against 87% have paid activity. When saving for
a specific purpose, for instance health emergencies, 97% of individuals used mobile money, 94%
used banks, 91% use credit union and 87% used informal methods. This is coherent with the fact
that individuals combine a variety of saving instruments to meet their financial objectives.
Regarding the sample of individuals that saved using the mobile money, the data shows
that about 49% are female, 56% are married, 27% have low education level, 41% are located in
rural area and 61% have an income more than 50 000 F CFA. The majority of them, around 63%
also used bank to saved, 51% used in informal savings methods and 47% used credit union
account to save. The mobile money account is also used to save for all the cited motivations with
97% for health emergencies and 7% to reimburse a loan.
9
We also report in Table A.8. in Appendix, descriptive statistics on the choice of deposit instruments.
14
Table 2. Data sample characteristics.
Full sample
Gender
Female
Male
Marital situation
Married
Single
Person in charge
Age
< 30
>= 30
Education level
Less than secondary education
level
At least secondary education level
Living place
Rural
Urban
Occupation / employment status
Paid activity
Unpaid activity (include student)
Income level and type
Income ranging from 10 000 to 50
000 FCFA
Income more than 50 000 FCFA
Irregular income
Regular income
Sample of individuals that report
with
with
with Informal
with Bank
Credit
Mobile
mechanisms
Union
Money
Full
sample
Mobile
money user
Saved
/
50,37%
91,60%
39,01%
46,91%
17,28%
44,69%
49,38%
50,62%
49,02%
50,98%
48,79%
51,21%
41,77%
58,23%
51,58%
48,42%
48,57%
51,43%
65,75%
34,25%
48,40%
50,86%
52,10%
54,90%
45,10%
52,45%
50,67%
48,79%
54,18%
57,59%
42,41%
65,82%
53,68%
45,79%
62,63%
55,71%
44,29%
54,29%
40,88%
58,56%
42,54%
50,62%
49,14%
48,53%
51,47%
48,25%
51,48%
39,87%
59,49%
46,84%
52,63%
48,57%
51,43%
59,67%
39,78%
41,73%
36,27%
42,59%
19,62%
41,58%
27,14%
50,83%
57,53%
63,73%
56,60%
79,11%
57,37%
72,86%
49,17%
52,10%
47,90%
59,31%
40,69%
52,02%
47,98%
43,04%
56,96%
52,63%
47,37%
41,43%
58,57%
38,67%
61,33%
80,99%
15,56%
77,45%
18,14%
83,56%
16,17%
82,28%
16,46%
87,37%
11,58%
71,43%
20,00%
82,87%
12,71%
48,64%
43,63%
46,09%
27,22%
39,47%
35,71%
62,43%
51,36%
47,90%
51,60%
56,37%
50,00%
49,51%
53,91%
53,10%
46,36%
72,78%
31,01%
68,35%
60,53%
56,84%
43,16%
64,29%
40,00%
58,57%
37,57%
49,72%
49,72%
Usage of mobile technology
Mobile phone user
99,26%
99,02%
99,46%
99,37%
100,00%
50,37%
49,60%
57,59%
52,11%
MM user
MM non user
49,63%
50,40%
42,41%
47,89%
Usage of saving instruments
Formal
85,93%
93,14%
93,80%
39,01%
44,61%
42,59%
39,47%
Bank
Credit Union
46,91%
48,53%
51,21%
47,47%
17,28%
34,31%
18,87%
27,85%
17,37%
MM
Informal
44,69%
38,24%
48,79%
34,18%
49,47%
Motivations
Education
33,33%
35,29%
36,39%
50,00%
31,58%
49,14%
44,61%
53,37%
43,04%
61,05%
Develop activity
Repay loan
14,07%
10,29%
15,36%
10,13%
22,63%
46,17%
45,10%
50,40%
62,03%
53,16%
Decrease of income
Health emergencies
81,98%
85,29%
89,22%
93,67%
90,53%
24,20%
23,53%
26,42%
37,97%
31,05%
Ceremonies (wedding, funerals)
Source: Authors’ analysis of the survey data collected in May 2014 in Burkina Faso. Throughout, F CFA (Franc of the
Community) refers to the local currency. The exchange rate during the survey period was about 500 F CFA = $1 US.
99,45%
43,09%
56,91%
62,86%
47,14%
29,83%
51,93%
19,89%
51,43%
37,14%
21,55%
40,00%
59,12%
7,14%
18,78%
78,57%
54,70%
97,14%
87,29%
42,86%
35,36%
African Financial
15
4. Model specification
We examine the impact of mobile money usage on individuals choice of saving instruments by using
a logistic model specify as follow:
PROByi  1  1   2 MMuseri   3 X i 
where

(1)
is the cumulative distribution function of logistic distribution.
In the model (1), yi stands for our dependent variable that characterizes individuals’ choice of
deposit instruments to capture the effective saving instruments used. It is dummy variable that
alternatively stands for: deposit using formal instrument, deposit using bank account, deposit using
credit union account, deposit using mobile money account and deposit through informal mechanisms
especially participating in a ROSCA. These dependent variables, except deposit using formal
instrument, are measured using the following questions asked to respondents that saving: “During the
past 12 months, did you make deposit using bank account?”; “using credit union account?”; “using
mobile money account?”; “participating in ROSCA?” All these variables are dummies and each
variable takes the value one if respondent reports YES, and zero otherwise. MMuseri is the independent
variable of interest that stands for the use of mobile money. It is a binary variable that takes the value
one if the respondent indicates using mobile money, and zero otherwise. X i is a vector of control
variables (age, marital situation, location, gender, occupation or employment status, person in charge,
education level, level and type of income). In Table 3 we report definitions of variables along with some
summary statistics.
If both users and non-users of mobile money do not differ in terms of their likelihood to make
deposit using informal and formal (bank and credit union) financial instruments, the coefficient  2
should not be statistically different from zero. If mobile money users have more likelihood to make
deposit using informal of formal financial instruments than non-users, the coefficient  2 should be
positive and statistically different from zero implying that mobile money account act as a complement of
informal or formal deposit instruments. If mobile money users have less likelihood to make deposit
using informal of formal financial instruments than non-users, then the coefficient  2 should be
negative and significantly different from zero reflecting that mobile money account act as a substitute of
informal or formal financial instrument used for money deposit.
16
Table 3. Definition of variables.
Variable
Mobile money user (MM
user)
Deposit in formal
institutions
Definition
Reply to the question: Do you use mobile money
services? Encoded as yes = 1, no = 0
Indicate when respondents deposit their money using
formal institutions, encoded as (save using banks
and/or credit unions) = 1, others = 0
Obs.
Mean
405
0.5
402
0.7
Deposit in bank account
Reply to the question: During the past 12 months, did
you deposit your money using bank account? Encoded
as yes = 1, no = 0
402
0.4
Deposit in credit union
account
Reply to the question: During the past 12 months, did
you deposit your money using credit union account?
Encoded as yes = 1, no = 0
402
0.5
401
0.4
176
0.9
190
0.9
404
30.55
405
0.51
405
0.48
401
0.53
402
2.67
405
0.52
391
0.84
Income
Indicate the monthly income of respondent, encoded
as Less than 10 000 FCFA = 1, 10 000 to 50 000
FCFA = 2, 50 000 to 150 000 FCFA = 3, 150 000 to
300 000 FCFA = 4, 300 000 to 500 000 FCFA = 5,
More than 500 000 FCFA = 6
405
2.61
Irregular income
Indicate the type of income of respondent, encoded as
Irregular = 1, Regular = 0
403
0.48
Deposit in mobile money
account
Deposit using informal
mechanisms
Participating in informal
mechanisms
Reply to the question: During the past 12 months, did
you deposit your money using your mobile money
account? Encoded as yes = 1, no = 0
Reply to the question: During the past 12 months, did
you deposit your money using informal mechanisms
(participating in a ROSCA)? Encoded as yes = 1, no =
0
Indicate when respondents report participating in
informal mechanisms, encoded as (savings group,
saving at home and/or with a neighbor) = 1, others = 0
Individuals characteristics
Age
Male
Married
Person in charge
Education
Rural
Occupation
Indicate the age of respondent
Indicate the gender of respondent, Encoded as Male =
1, Female = 0
Indicate the marital situation of respondent, Encoded
as Married = 1, Single = 0
Indicate if the respondent has or not dependent,
Encoded as Having dependent = 1, otherwise = 0
Indicate the education level of respondent, Encoded as
Illiterate = 1, Primary = 2, Secondary = 3, University
=4
Indicate the location of respondent, Encoded as Rural
= 1, Urban = 0
Indicate the employment status of respondent,
Encoded as (Employed, Entrepreneur, Merchant,
Farmer) = 1, (Unemployed, Student) = 0
Source: Throughout, F CFA (Franc of the African Financial Community) refers to the local currency. The exchange rate during
the survey period was about 500 F CFA = $1 US.
17
5. Results
This section reports our main results. Table 4 presents estimates of the impact of mobile money
on individuals’ choice of deposit instruments. We analyze the likelihood of mobile money user
compared to non-user of mobile money to make deposit using formal and/or informal financial
mechanisms. Specifically, we test whether mobile money increases the likelihood of individuals to make
deposit using formal institutions such as banks and credit unions than informal deposit mechanisms
compared to non-users of mobile money. Across the columns, we find the coefficients of the variable of
interest MM user statistically significant in columns 4 and 5. But in columns 1 to 3 this coefficient is not
significantly different from zero. According to the results, the use of mobile money increases the
likelihood of individuals to make deposit in mobile money account but it decreases their likelihood to
participate in informal deposit mechanisms respectively by (175.3%)10 and (0.30%). However, we find
no difference in the likelihood of mobile money user compared to mobile money non-user to make
deposit in formal institutions such as banks and credit unions. Our results are consistent with the
findings of Mbiti and Weil (2011) and Morawczynski and Pickens (2009) that mobile money acts as a
substitute of informal deposit mechanisms.
Looking at the effect of socioeconomic characteristics on individuals’ choice of deposit
instruments, we distinguished formal financial institutions including banks, credit unions and mobile
money from informal saving mechanisms as well as ROSCA. Regarding deposit using formal
institutions (columns 1 to 4), we find the coefficient of married positive and significant (columns 1, 3
and 4) implying that a household of more than one individual have more likelihood to make deposit
using formal instruments especially credit unions and mobile money accounts than single individual.
This result may reflect the fact that households need better insurance and security of their money
according to household expenditure (such as healthcare, education) leading them to make deposit in
formal institutions. The reported results also show the coefficient of irregular income negative and
significant in column 2 but positive and significant in column 3 and 4. Thus, irregular income
individuals have less likelihood to make deposit in banks but have more likelihood to make deposit in
credit union and mobile money account than regular income individuals. In fact people with irregular
income are less likely to integrate informal saving groups. This may be due to the unpredictable income
and the high cost of bank services that dissuade individuals to use them.
10
The coefficients reported in all our tables are the log odds of the use of mobile money on the choice of savings instruments.
To obtain the odds ratio, we simply compute the exponential of log odds.
18
Table 4. Choice of deposit instruments and mobile money adoption
MM user
Age
Age squared
Married
Rural
Male
Occupation
Irregular income
Person in charge
Education
Income
Income squared
Constant
Observations
Pseudo R2
Wald χ2 (H0: nullity of
coefficients)
Likelihood ratio test (H0:
nullity of coefficients)
Deposit in formal
institutions
(1)
-0.165
(0.283)
-0.038
(0.154)
0.001
(0.002)
0.901**
(0.374)
0.268
(0.303)
-0.054
(0.274)
0.157
(0.461)
-0.276
(0.307)
0.299
(0.263)
0.840***
(0.190)
2.921***
(0.704)
-0.341***
(0.112)
-6.504***
(2.430)
Deposit in bank
account
(2)
0.374
(0.298)
0.115
(0.159)
-0.001
(0.002)
0.293
(0.396)
-0.450
(0.318)
-0.097
(0.280)
-0.205
(0.508)
-0.960***
(0.302)
0.338
(0.274)
1.141***
(0.233)
0.415
(1.201)
0.144
(0.225)
-8.226***
(2.747)
379
0.1975
379
0.3359
63.97***
128.93***
Full sample
Deposit in credit
union account
(3)
-0.111
(0.236)
-0.094
(0.129)
0.001
(0.002)
0.587**
(0.284)
-0.149
(0.238)
-0.180
(0.227)
-0.032
(0.407)
0.756***
(0.250)
0.305
(0.215)
0.123
(0.145)
2.101**
(1.018)
-0.310*
(0.183)
-2.076
(2.243)
Deposit in mobile
money account
(4)
5.167***
(0.610)
-0.034
(0.218)
-0.000
(0.003)
1.270***
(0.425)
0.246
(0.389)
0.661*
(0.367)
-1.224**
(0.593)
0.731*
(0.382)
0.132
(0.356)
0.475*
(0.252)
1.790
(1.123)
-0.273
(0.190)
-6.997**
(3.249)
Deposit in savings groups
or at home
(5)
-1.268*
(0.679)
-0.294
(0.826)
0.003
(0.013)
0.188
(1.197)
-2.548*
(1.497)
0.176
(0.948)
2.989
(2.116)
-0.989
(1.065)
0.689
(0.574)
-0.440
(0.581)
-1.871
(3.115)
0.178
(0.399)
13.813
(15.034)
379
0.0488
378
0.5893
169
0.2759
77.95***
23.79**
114.07***
51.31***
200.71***
57.56***
331.92***
16.66*
% correct prediction (y=1)
68.28%
66.45%
58.85%
94.16%
93.21%
% correct prediction (y=0)
76.58%
86.61%
62.03%
84.38%
57.14%
Note: Dependent variables: deposit using formal financial institutions, deposit using bank account, deposit using credit union account,
deposit using mobile money account and deposit using informal mechanisms are all dummies. Deposit using formal financial institution
equals 1 if respondents make deposit using bank account and/or credit union account, and 0 otherwise. Deposit using bank account equals
to 1 if respondents make deposit using bank account, and 0 otherwise. Deposit using credit union account equals to 1 if respondents make
deposit using credit union account, and 0 otherwise. Deposit using mobile money account equals to 1 if respondents make deposit using
mobile money account, and 0 otherwise. Deposit using informal mechanisms equals to 1 if respondents make deposit using informal
mechanisms, and 0 otherwise. The variable of interest, MM user is also a dummy that equal to 1 if respondents use mobile money, and 0
otherwise. The coefficients reported in the table are the log odds of the use of mobile money on the choice of savings instruments. To
obtain the odds ratio, we simply compute the exponential of log odds. Robust standard errors in brackets. *** Significant at the 1% level,
** Significant at the 5% level, * Significant at the 10% level.
19
The variable income is entered in nonlinear form (income and income squared) to highlight how an
increase in the income affect individuals choice of saving instruments. Our results show the coefficient
of income positive and significant in columns 1 and 3. Then, individuals with high income have more
likelihood to make deposit using formal institutions, while their have less likelihood to participate in
informal deposit mechanisms than low income individuals. Moreover, greater increase of income
decreases the likelihood to use formal deposit instruments indicating that an increase in the income after
a certain threshold leads individuals to diversify their deposits in other instruments to lessen the risk
related to each type of deposit instruments. Some explanations of these results may stem from the high
costs of opening formal account and fees of account maintaining that discourage poor individuals to
access formal financial services (Allan, Massu and Svarer, 2013; Beck, Demirgüç-Kunt and Honohan,
2009; Kendall, 2010).
The level of education shows difference in the choice of deposit instruments. We show the
coefficient positive and significant in columns 1, 2 and 3, indicating that greater level of education
increases the likelihood of individuals to make deposit using formal institutions especially bank and
mobile money accounts. In column 4, we find that the coefficient of male positive and significant
implying that male have more likelihood to make deposit in the mobile money account than female. The
results also report the coefficient of occupation negative and significant indicating that unemployed and
student have more likelihood to make deposit in the mobile money account than individuals with paid
activity. Turning now to informal deposit mechanisms (column 5), we find that rural has negative and
significant impact on participating in informal deposit mechanisms. This result indicates that individuals
located in rural areas have less likelihood to participate in informal deposit mechanisms than those
located in urban area. This result confirms the findings of Carpenter and Jensen (2002) who argue that
urban areas facilitate the formation of informal deposit mechanism such as ROSCA, and that rural
individuals are disadvantaged in access to even informal finance methods.
One of the most important questions about mobile money is to understand to what extent it can
improve formal financial access. Although mobile money reduces the likelihood to make deposit
through informal mechanisms, there is no evidence that it may bring out informal finance participants
toward formal finance.
20
To highlight this issue, we investigate whether the use of mobile money increases the likelihood
of individuals who participate in informal deposit mechanisms to make deposit in formal financial
institutions such as banks and credit unions. We use the following specification as almost all
respondents report participating in informal financial mechanisms:
PROBy i  1  ( 1   2 MMuseri   3 MMuseri  PIM i   4 PIM i  X i )
where

(2)
is the cumulative distribution function of logistic distribution.
In the model (2), yi stands for our three dependent variables that characterize individuals’
choice of deposit instruments to capture the effective deposit instruments used. It is a dummy variable
that alternatively stands for: deposit using formal instrument, deposit using bank account and deposit
using credit union account. MMuseri represents the use of mobile money. PIM i is a binary variable
that stands for participating in informal financial mechanisms. It is a dummy variable that equals to one
when the individual participates in informal financial mechanisms (savings groups, saving at home
and/or with a neighbor), and zero otherwise. We add the interaction between mobile money use and the
participation in informal deposit mechanisms. X i is the same vector of control variables used in
equation (1) that we also interact with the participation in informal deposit instrument. The coefficient of
interest is given by the total effect of being mobile money user and participating in informal deposit
mechanisms (  2   3 ). The coefficient  2 give the effect of being mobile money user and not
participating in informal deposit mechanisms.
Table 5 presents the results. We show the coefficient of variable of interest while not significant
in column 2 and 6, this coefficient is positive and significant in column 4. Thus, mobile money increases
the likelihood of individuals participating in informal deposit mechanisms to make deposit using bank
account by (4.32%). These results suggest therefore that mobile money may improve formal financial
access and acts as a channel through which individuals can reduce their use of informal financial
services. Moreover, the results also show the mobile money user positive and significant in table 1 and
3. Reflecting that the use of mobile money increases the likelihood of individuals who do not
participating in informal mechanisms to make deposit in formal institution especially in bank account.
While participating in informal mechanisms lessen the effect of mobile money on the likelihood of
individuals to access and/or use formal financial services, but on the whole mobile money facilitates the
transition from informal mechanisms toward formal financial services.
21
Table 5. Choice of deposit instruments and mobile money adoption: individuals
participating in informal financial mechanisms
MM user
MM user x Participate in informal
mechanisms
Participate in informal mechanisms x
Age
Age squared
Married
Rural
Male
Occupation
Irregular income
Person in charge
Education
Income
Income squared
Constant
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of
coefficients)
Individuals participating in informal financial mechanisms
Deposit in credit union
Deposit in formal institutions
Deposit in bank account
account
Total effect
Total effect
Total effect
(1)
(2)
(3)
(4)
(5)
(6)
15.060***
21.865***
-0.401
(1.490)
(5.388)
(1.654)
-15.332***
-0.272
-20.402***
1.463***
0.201
-0.2
(1.552)
(0..421)
(5.298)
(0.546)
(1.704)
(0.399)
-0.447*
(0.240)
0.007*
(0.004)
0.534
(0.532)
0.098
(0.545)
-0.316
(0.454)
-0.617
(0.841)
1.025**
(0.472)
0.539
(0.404)
1.303***
(0.302)
1.252
(2.037)
-0.035
(0.388)
0.823
(1.448)
0.477
(0.330)
-0.007
(0.005)
-0.039
(0.821)
-2.183**
(0.928)
-0.068
(0.642)
0.064
(0.855)
-0.897
(0.578)
0.472
(0.543)
2.014***
(0.515)
4.746**
(2.155)
-0.660*
(0.343)
-21.354***
(5.338)
-0.454**
(0.189)
0.008**
(0.003)
0.010
(0.471)
-0.285
(0.506)
-0.781*
(0.427)
-1.006
(0.757)
1.432***
(0.456)
0.519
(0.384)
0.822***
(0.254)
2.537*
(1.539)
-0.346
(0.259)
0.912
(1.483)
178
0.2591
1582.05***
178
0.4823
39.36***
178
0.1721
40.01***
324.47***
424.93***
355.65***
% correct prediction (y=1)
64.04%
75.86%
80.20%
% correct prediction (y=0)
78.13%
90.00%
55.84%
Note: Dependent variables: deposit using formal financial institutions, deposit using bank account, deposit using credit union
account are all dummies. Deposit using formal financial institution equals 1 if respondents make deposit using bank account
and/or credit union account, and 0 otherwise. Deposit using bank account equals to 1 if respondents make deposit using bank
account, and 0 otherwise. Deposit using credit union account equals to 1 if respondents make deposit using credit union account,
and 0 otherwise. The variable of interest, MM user is also a dummy that equal to 1 if respondents use mobile money, and 0
otherwise. The coefficients reported in the table are the log odds of the use of mobile money on the choice of savings instruments.
To obtain the odds ratio, we simply compute the exponential of log odds. .Robust standard errors in brackets. *** Significant at
the 1% level, ** Significant at the 5% level, * Significant at the 10% level.
22
According to the remaining explanatory variables, the results show the coefficient of rural negative and
significant only in column 3. Indicating that individuals located in rural area and participating in
informal deposit mechanisms have less likelihood to make deposit in banks than those located in urban
area. We also find the coefficient of male negative and statistically significant only in column 5
implying that male participating in informal deposit mechanisms have less likelihood to make deposit in
credit unions than female. In columns 1 and 5, the coefficient of variable age is negative and significant
but the coefficient of variable age squared is negative and significant. Then, older individuals have more
likelihood to make deposit in formal institutions especially credit unions than least aged individuals. The
results for variables irregular income, education and income are similar to that find in Table 4. Our
results show the coefficient of irregular income positive and significant (columns 1 and 5). Then,
irregular income individuals participating in informal deposit mechanisms have more likelihood to make
deposit in formal institutions especially in credit unions than those with regular income. Across
columns, the coefficient of education is positive and significant reflecting that increasing education
level, increases the likelihood of individuals participating in informal deposit mechanisms to make
deposit in formal institutions such as banks and credit unions. Similarly, the coefficients of income is
positive and significant in columns 3 and 5, while the coefficient of income squared is negative and
significant only in column 3. Thus increasing the level of income leads to an increase in the likelihood
of individuals who use informal mechanisms to make deposit in formal institutions such as banks and
credit unions. While greater increase in the income reduces the likelihood to make deposit in formal
institutions.
Overall, our results show that mobile money acts as a substitute of informal deposit mechanisms,
while we find no evidence concerning the relation between the use of mobile money and formal deposit
instruments. However, we find that mobile money increases the likelihood of individuals participating in
informal mechanisms to make deposit in banks. Therefore, mobile money may contribute to improve
formal financial access by bringing individuals using informal finance toward formal finance.
Nonetheless, one may question the effects of mobile money on the barriers to formal financial access
such as the low and unpredictable income of poor people, the remoteness or lack of formal financial
infrastructures (rural/urban), gender discrimination (female/male) and the lack of financial literacy (less
educated/high educated).
23
With regard to this question, we test whether mobile money can bringing down barriers to
formal financial access by looking at its effects on formal deposit instruments by distinguishing low and
high income individuals, irregular and regular income, rural and urban, female and male, and less and
high educated individuals. We use the following specification in equation (3) to restrict our sample on
sub-samples of low and irregular income, rural, female and less educated individuals.
PROB  yi  1   1   2 MMuseri   3 Subsamplei   4 MMuseri  Subsamplei   5 Subsamplei  X i   6 X i 
(3)
where  is the cumulative distribution function of logistic distribution.
In Table 6 we report estimates of the effect of mobile money on the choice of deposit
instruments for individuals with different level and type of income. The coefficients of interest are  2
and the total effect given by  2 +  4 . Considering the level of income, we show the coefficient of low
income individuals negative and significant in columns 2, while the coefficient of high income
individuals is positive and significant in columns 1 and 3. These results indicate that for low income
individuals mobile money decreases their likelihood to save in formal institutions by 0.46%, then mobile
money acts as a substitute of formal deposit instruments. While mobile money increases the likelihood
of high income individuals to make deposit in formal institutions by 2.96%. Considering the type of
income, we find the coefficient of individuals with irregular income significant in column 4. Implying
that the use of mobile money increases the likelihood of irregular income individuals to make deposit in
bank account by 3.04%. Our findings suggest that mobile money appears to be a substitute of formal
financial institutions for low income individuals, while for irregular income individuals mobile money
acts as a complement of bank account. The results also indicate that for high income individuals mobile
money acts as a complement of formal financial instruments.
We turn now to the remaining set of individuals demographic and socio-economics
characteristics that appear to be barriers to the access of formal financial deposit instruments. In Table 7,
we present the effect of mobile money on individuals’ choices of deposit instruments on the basis of
their location, gender and level of education. Considering individuals assumed to have access to formal
institutions (urban, male and high educated), the results show that the use of mobile money increases the
likelihood of urban to make deposit in bank account by 2.15%. These results imply that individuals
located in urban area use mobile money in complement to bank account.
24
Table 6. Choice of deposit instruments and mobile money adoption: Low, irregular vs. High, regular
income.
Low vs. High income
MM user
Low income
MM user x Low income
Controls
Low income x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of
coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Deposit in formal
institutions
Total effect
(1)
(2)
1.084**
(0.514)
11.017**
(5.521)
-1.866***
-0.782**
(0.633)
(0.368)
YES
YES
Deposit in bank account
(3)
0.665
(0.409)
-2.053
(5.770)
-0.642
(0.618)
YES
YES
Total effect
(4)
0.023
(0.464)
Deposit in credit union
(5)
0.234
(0.354)
8.509*
(4.989)
-0.810
(0.509)
YES
YES
379
0.220
68.34***
379
0.326
96.51***
379
0.111
46.53***
139.01***
195.74***
90.09***
82.46%
66.67%
81.29%
75.89%
61.98%
72.73%
Total effect
(6)
-0.576
(0.366)
Irregular vs. Regular income
MM user
Irregular income
MM user x Irregular income
Controls
Irregular income x Controls
Deposit in formal
institutions
Total effect
(1)
(2)
-0.057
(0.465)
-7.209
(6.559)
-0.073
-0.130
(0.608)
(0.393)
YES
YES
Deposit in bank account
(3)
-0.228
(0.433)
9.075
(6.822)
1.340*
(0.699)
YES
YES
Total effect
(4)
1.112**
(0.548)
Deposit in credit union
(5)
0.157
(0.333)
-21.111***
(6.990)
-0.354
(0.498)
YES
YES
Total effect
(6)
-0.198
(0.371)
Observations
379
379
379
Pseudo R2
0.253
0.390
0.121
Wald χ2 (H0: nullity of coefficients)
71.07***
108.54***
45.18***
Likelihood ratio test χ2 (H0: nullity of
154.38***
228.23***
95.33***
coefficients)
% correct prediction (y=1)
71.27%
70.97%
67.19%
% correct prediction (y=0)
80.18%
87.50%
67.38%
Note: Dependent variables: deposit using formal financial institutions, deposit using bank account, deposit using credit union account are all
dummies. Deposit using formal financial institution equals 1 if respondents make deposit using bank account and/or credit union account, and
0 otherwise. Deposit using bank account equals to 1 if respondents make deposit using bank account, and 0 otherwise. Deposit using credit
union account equals to 1 if respondents make deposit using credit union account, and 0 otherwise. With the interactions, the total effect is
given by the sum of the coefficient of the interaction term plus the coefficient of the use of mobile money (MM user), and the p-value obtain
through the Wald test is reported below. Low income individuals are those with less than 50 000 F CFA (around $100US) per month. Irregular
income individuals are those who specify having irregular income by answering the following question: “Do you have regular or irregular
income?” The responses are encoded as irregular income = 1, and regular income = 0. The coefficients reported in the table are the log odds of
the use of mobile money on the choice of savings instruments. To obtain the odds ratio, we simply compute the exponential of log odds.
Controls included: age, age squared, married, rural, male, occupation, irregular incomes, person in charge, education level, incomes level and
incomes squared. According to the subsamples we remove respectively controls incomes level and incomes squared, and irregular incomes.
Robust standard errors in brackets. *** Significant at the 1% level, ** Significant at the 5% level, * Significant at the 10% level.
25
By contrast, we find that the use of mobile money decreases the likelihood of high educated
to make deposit in credit union account. Then, mobile money appears to be a complement of
formal financial instrument especially bank account for urban, but a substitute of credit union
account for high educated individuals. Regarding the excluded group, while mobile money have
no effect on the likelihood of rural to make deposit in formal financial institutions, it increases the
likelihood of female to make deposit using bank account by (3.58%). Similarly, the use of mobile
money increases the likelihood of less educated individuals to make deposit in bank and credit
union by respectively (2.78% and 2.07%). Thus, these findings suggest that mobile money acts as
a complement of formal financial institutions such as banks for female, bank and credit union for
less educated individuals.
Overall, our results show that mobile money may help individuals overcome barriers to
formal deposits instruments especially for formally excluded individuals by bringing them from
informal finance to formal finance. Mobile money appears to be a substitute of formal deposit
instruments for low income individuals, but acts as a complement of formal deposit instruments
for high income individuals, urban and more interesting for female, irregular income and less
educated individuals. Moreover, by reducing the use of informal deposit mechanisms, mobile
money appears as a stepping stone toward formal financial institutions for poor people especially
female, irregular income and less educated individuals that have less access to formal financial
services.
26
Table 7. Choice of formal deposit instruments and mobile money adoption: Low vs. High access to formal finance
MM user
Rural
MM user x Rural
Controls
Rural x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
MM user
Female
MM user x Female
Controls
Female x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Deposit in formal institutions
Total effect
(1)
(2)
-0.337
(0.401)
-5.907
(6.652)
0.280
-0.056
(0.584)
(0.424)
YES
YES
379
0.212
70.70***
135.42***
67.54%
79.28%
Rural vs. Urban
Deposit in bank account
Total effect
(3)
(4)
0.764*
(0.402)
7.381
(6.883)
-0.864
-0.100
(0.612)
(0.461)
YES
YES
379
0.386
98.20***
226.54***
70.97%
87.05%
Deposit in credit union
Total effect
(5)
(6)
-0.260
(0.344)
-7.703
(5.261)
0.268
0.008
(0.490)
(0.348)
YES
YES
379
0.089
32.62*
78.69***
67.19%
61.50%
Deposit in formal institutions
Total effect
(1)
(2)
-0.085
(0.478)
4.882
(5.023)
-0.124
-0.210
(0.610)
(0.379)
YES
YES
379
0.210
76.44***
134.57***
68.66%
77.48%
Female vs. Male
Deposit in bank account
Total effect
(3)
(4)
-0.564
(0.427)
15.911***
(5.842)
1.840***
1.276**
(0.704)
(0.559)
YES
YES
379
0.390
101.94***
228.64***
74.84%
84.82%
Deposit in credit union
Total effect
(5)
(6)
-0.233
(0.343)
-6.709
(4.762)
0.258
0.025
(0.497)
(0.359)
YES
YES
379
0.086
40.86**
77.04***
65.63%
63.64%
Less vs. High educated
Deposit in formal institutions
Deposit in bank account
Deposit in credit union
Total effect
Total effect
Total effect
(1)
(2)
(3)
(4)
(5)
(6)
MM user
-0.612
0.574
-0.650**
(0.440)
(0.365)
(0.323)
Less educated
9.476*
11.630*
6.083
(5.331)
(6.943)
(5.155)
MM user x Less educated
1.206**
0.594
0.448
1.021*
1.378***
0.727**
(0.585)
(0.385)
(0.674)
(0.567)
(0.492)
(0.371)
YES
YES
YES
Controls
Less educated x Controls
YES
YES
YES
Observations
382
382
382
Pseudo R2
0.224
0.339
0.104
Wald χ2 (H0: nullity of coefficients)
223.01***
270.09***
193.02***
Likelihood ratio test χ2 (H0: nullity of coefficients)
139.58***
199.31***
83.01***
% correct prediction (y=1)
69.00%
64.97%
69.59%
% correct prediction (y=0)
80.18%
85.78%
63.30%
Note: Dependent variables: deposit using formal financial institutions, deposit using bank account, deposit using credit union account are all dummies. Deposit using formal financial
institution equals 1 if respondents make deposit using bank account and/or credit union account, and 0 otherwise. Deposit using bank account equals to 1 if respondents make deposit
using bank account, and 0 otherwise. Deposit using credit union account equals to 1 if respondents make deposit using credit union account, and 0 otherwise. With the interactions, the
total effect is given by the sum of the coefficient of the interaction term plus the coefficient of the use of mobile money (MM user), and the p-value obtain through the Wald test is
reported below. Less educated individuals are those with primary education level or less (about six years of schooling at best). To obtain the odds ratio, we simply compute the
exponential of log odds. Controls included: age, age squared, married, rural, male, occupation, irregular incomes, person in charge, education level, incomes level and incomes
squared. According to the subsamples we remove respectively controls rural, male and education level. Robust standard errors in brackets. *** Significant at the 1% level, **
Significant at the 5% level, * Significant at the 10% level.
27
6. Discussion of the potential mechanisms
Overall, we find that mobile money contributes to financial inclusion by reducing the use
of informal deposit mechanisms but increasing the likelihood to make deposit using formal
financial instruments. In this section, we address the mechanisms underlying the use of mobile
money as a complement or a substitute of informal and formal deposit instruments. The
prominent way by which mobile money improves the likelihood of individuals to make deposit
using mobile money account is the advantage that it provides such as safety, competitive costs,
ease of use, proximity, and costs and possibility of transfers. But other mechanisms could be at
work especially the attributes related to others deposit instruments that may lead individuals to
consider mobile money as a complement or substitute of informal and formal deposit
mechanisms.
We identify four attributes that are mainly cited as factors that lead individuals choice of
deposit instruments between informal and formal methods (Allan, Massu, and Svarer 2013;
Kendall 2010; Kendall et al. 2011). The first is the risk relying on both formal and informal
finance. Informal deposit mechanisms (ROSCAs) are find to be quite risky and often incur losses
as member can disband without warning, and proceed outside of the scope of the formally
regulated and supervised financial services system. While, formal deposit instruments tend to be
less risky than informal deposit instruments, they are not immune from risk, failure and fraud
although well-regulated and supervised financial institutions (Kendall, 2010). Mobile money
have the advantage to be secure as it involves banks (in partnership with mobile operators) that
are formally regulated and supervised. Moreover, all financial transactions performed through
mobile money account are traceable. In this situation, mobile money as well as formal deposit
instruments can be preferred as a deposit account according to the risk associated with informal
financial mechanisms. The second is costs of financial services that play a critical role in the
choice of deposits instruments. Many formal institutions charge higher fees of transactions and
account maintenance to their customer and the minimum balances require lead individuals to
prefer informal deposit option that have the advantage to be at lower costs. However, informal
deposit mechanisms as well as ROSCA, often charge high costs when member face emergencies
and need to move ahead in the queue to access their deposit or savings. Thus, as mobile money
offers competitive costs comparing to both informal and formal finance, this may motivate
28
individuals to use mobile money as a saving account. The third is associated to the level of
liquidity that informal and formal finance provided. For both deposit instruments, liquidity refers
to the accessibility or the rapidity with which individuals can access their deposits. In developing
countries, accessing deposits made in a formal financial institution is not realistic according the
long distance people have to travel to reach an agency and the time they would spend in long
queue. Similarly, when participating in a rotating savings groups, members cannot access their
deposits when needed according to preset order for the pot assignment. Mobile money account
appear be appropriate to make deposits according the large network of mobile money agent
throughout the country that insure the conversion of electronic money into cash (and vice versa)
and allow people to access their deposits when the need arises. The fourth rely on the quality of
financial services that is the reliability and privacy associate with informal and formal financial
instruments. Informal deposit mechanisms (savings groups) are often unreliable as they may
disband when needed most and some savings groups may break down when the local economy
experience a downturn that may simultaneously default members (Kendall 2010). Thus, the
reliability of savings groups entails the perception of each participant of the probability that these
types of risk may occur. Privacy is a desirable quality for financial instrument that helps
individuals resist the temptation to spend out deposits or savings to assist family or friends
(Collins et al. 2009). However, savings groups based on social relationship used social pressure
to motivate member to make regular deposits and often lead members to share problem with
others. Moreover, when receiving the pot individuals may face many losses by lending the money
to family and friends which often do not paid back. By contrast, formal deposit account as well as
mobile money account are always reliable, safe and personal (as the account is password
protected), and allow individuals to determine their own frequency to make deposits. In this way,
it seems that quality may lead individuals to prefer mobile money to informal deposit
mechanisms while it may not affect the choice between mobile money and formal financial
instruments.
29
To provide evidence on the mechanisms describe above that is the attributes of formal and
informal financial mechanisms that may motivate mobile money users to make deposit in the mobile
money account, we consider the following specification:
PROBDMM i  1  (1  2 Attributesi  3 Attributesi  MMuseri  4 MMuseri  X i )
(4)
where  is the cumulative distribution function of logistic distribution.
In equation (4), DMM i , deposit made using mobile money account, is the dependent variable.
It is a binary variable that indicate the response of individual i to the following question “During the
past 12 months, did you deposit your money in your mobile money account?” It is encoded as one if
the individual i (mobile money user) response is YES, and encoded zero if the response is NO. X i
represent the same set of control variables in equations above (age, marital situation, location, gender,
occupation or employment status, person in charge, education level, level and type of income).
Attributesi is the independent variable of interest and consist of risk, cost, illiquidity and low quality
related to formal, and informal financial mechanisms and that may influence the decision to make
deposit in the mobile money account. In fact, we compare individuals perception of risk, cost,
illiquidity and low quality associated with formal and informal financial mechanisms to those related
to the mobile money. Thus, we compute our set of attributes as follow:
Attributesi 
Attributesi Formal / Informal
MM _ Attributesi
We distinguish attributes related to formal financial methods to those related to informal
financial mechanisms. For instance, to obtain the attribute risk related to formal financial institutions
compared to those of mobile money, we divide individual i perception of risk related to formal
financial methods by her/his perception of risk related to mobile money account. All the variables are
measured on 5-point Likert scale ranging from one (low) to five (high). Summary statistics are
reported in Table A.2. in Appendix.
Table 8 presents results of the impact of formal and informal finance attributes on the
likelihood of individuals to make deposit in the mobile money account given by the coefficient of
interest that is the total of effect of
 2  3 .
Considering factors related to formal financial
institutions, our results show the coefficients of interest associated with cost, illiquidity and low
30
Table 8. Factors affecting the choice of making deposit using mobile money account.
Full sample
Deposit using mobile money account
Attributes of Formal/Mobile money
MM user x
Attributes of
informal/mobile
money
Attributes of
informal/mobile
money
Attributes of Informal/Mobile money
Risk
Cost
Illiquidity
Low quality
Risk
Cost
Illiquidity
Low quality
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
21.867***
12.818***
9.843**
-3.968
0.694
1.178
1.459**
238.482***
(8.217)
(3.821)
(4.045)
(3.126)
(0.427)
(1.213)
(0.666)
(52.746)
-21.615***
-8.684**
-8.235*
6.462**
(Omitted)
(Omitted)
(Omitted)
-236.947***
(8.110)
(4.096)
(4.315)
(2.967)
Controls included
NO
NO
NO
YES
NO
NO
NO
YES
MM user x
Controls included
YES
YES
YES
YES
YES
YES
YES
YES
Total effect
(52.744)
0.252
4.134***
1.608**
2.494**
0.694
1.178
1.459**
1.534**
(0.784)
(1.327)
(0.714)
(0.984)
(0.427)
(1.213)
(0.666)
(0.633)
Observations
146
146
146
341
73
72
72
347
Pseudo R2
Wald χ2 (H0:
0.134
0.322
0.210
0.6606
0.383
0.373
0.385
0.6870
256.27***
270.30***
256.83***
27.25***
26.78***
18.86*
426.02***
451.12***
436.18***
487.73***
487.29***
488.32***
nullity of
coefficients)
Likelihood ratio
test χ2 (H0: nullity
384.38***
394.18***
of coefficients)
% correct
95.87%
92.56%
94.21%
72.03%
88.46%
88.24%
86.27%
69.66%
prediction (y=1)
% correct
20.00%
60.00%
40.00%
94.44%
76.19%
76.19%
71.43%
94.55%
prediction (y=0)
Note: Dependent variables: deposit using mobile money account is a dummy that takes the value 1 if respondents make deposit
using mobile money account, and 0 otherwise. Robust standard errors in brackets. In columns 4 and 8, we add the variable MM
user used in the interaction terms in the controls variables. We use a logistic model specify in equation (3). Controls included:
age, age squared, married, rural, male, occupation, irregular incomes, person in charge, education level, incomes level and
incomes squared. Table A.2. in the Appendix gives definitions and summary statistics of the attributes of formal and informal
financial mechanisms that consist of risk, cost, illiquidity and low quality. *** Significant at the 1% level, ** Significant at the
5% level, * Significant at the 10% level.
31
quality positive and significant (columns 2 to 4). Implying that individuals who perceive formal
financial methods costly than mobile money, the use of mobile money increases their likelihood
to make deposit in the mobile money account. Similarly, individuals who perceive formal
financial methods illiquid and lower quality than mobile money, the use of mobile money
increases their likelihood to make deposit in the mobile money account. Our results suggest that
individuals may prefer to use mobile money account for deposit than formal financial institutions
due to the relative low fees of transactions and the convenience that mobile money provides.
Regarding attributes related to informal financial mechanisms, we find the coefficients of
interest associated with illiquidity and low quality positive and significant. Reflecting that
individuals who perceive informal financial methods illiquid and of lower quality than mobile
money, the use of mobile money increases their likelihood to make deposit in the mobile money
account. These findings support the fact that making deposits using informal mechanisms such as
savings groups makes difficult the access to money when a need arises. Similarly, saving at home
makes difficult to resist the temptation to spend out deposits on unnecessary items or to
excessively assist family and friends. Thus, individuals may prefer mobile money account that is
personal, allows avoiding unneeded expenditures and facilitate access to deposit when the need
arises.
7. Endogeneity issue
In this section we discuss the potential endogeneity problem. In order to confirm that the
observed differences in the choice of deposit instrument between mobile money users and nonusers and among subsamples (individuals participating in informal mechanisms, low/high
income, irregular/regular income, rural/urban, female/male, less/high educated) are genuinely due
to the use of mobile money, we replicate the estimations reported in section 5 and 6 using
standard instrumental variables methods.
In fact, we have assumed that the effect of the use of mobile money on individuals’ choice of
deposit instruments to be independent given the control variables included in the regressions.
Therefore, the estimated coefficients are valid only if the use of mobile money is not correlated
with the error term conditional on the control variables. Furthermore, making deposit in any of
32
financial instruments may influence the decision of individuals to use mobile money as cheaper
and convenient deposit instrument. Also, banked individuals may use mobile money to easily
make deposit in their bank account. To address this potential endogeneity issue resulting from
simultaneous effects, we resort to instrumental variable estimation of choice of deposit
instruments. Following Jack and Suri (2014) who consider the distance to the closest agent, we
use the same excluded instrument that we measure through the following question “What
distance did you travel to reach a mobile money agent?” The response are encoded on 5-point
Likert scale, 1 (less than 1 km), 2 (1 to 2 km), 3 (2 to 5 km), 4 (5 to 10 km) and 5 (10 km and
more). We also use the capacity to use cell phone to perform monetary transactions as a second
excluded instrument. This variable is measured using the following question “How do you rate
your ability to use a cell phone to perform monetary transaction?” And the responses are
encoded using 5-point Likert scale ranging from 1 (very low) to 5 (very high). The correlation
matrix reveals a relatively low correlation between these two instruments (   0.37 ).
Table 9 presents results of the reduced form for predicting the use of mobile money. As
expected, the coefficient the distance to the nearest agent is negative and significant. Implying
that the further the mobile money agents, the harder it may be for individuals to access and use
mobile money services. So, individuals have more likelihood to use mobile money if the distance
from the nearest retail agent is relatively shorter. Similarly, we find the coefficient of capacity to
use cell phone to perform monetary transactions positive and significant. This finding suggests
that more able individuals can use cell phone to perform monetary transactions, more likely they
may adopt/use mobile money services. We report Chi-square Wald test for the weakness of the
instruments and Chi-square Sargan test for the exogeneity of instruments (and each
corresponding p-value). For the Wald test, the statistic is 23.45 and significant at 1% allowing us
to confirm that our instruments are not weak. The Sargan test do not reject the null hypothesis for
the exogeneity of instruments with statistic of 0.6 and not statistically significant.
33
Table 9. Reduced form analysis of the use of mobile money
Distance to the nearest agent
Capacity to use a phone to perform monetary transactions
Age
Age squared
Married
Rural
Male
Occupation
Irregular income
Person in charge
Education
Income
Income squared
Constant
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Wald χ2 (H0: Weakness of instruments)
p-value
Sargan test χ2 (H0: Exogeneity of instruments)
p-value
Full sample
Adoption/Usage of mobile money
-5.922***
(1.229)
1.988***
(0.525)
-0.601
(0.589)
0.008
(0.009)
4.214***
(1.330)
2.361***
(0.810)
1.265*
(0.750)
1.194
(1.319)
-0.430
(0.968)
-0.132
(0.818)
1.440**
(0.633)
-2.244
(4.622)
0.130
(0.899)
18.967
(12.205)
380
0.915
58.09***
424.88***
97.91%
98.94%
23.45
0.000
0.06
0.999
Notes: Dependent variables: the use of mobile money. The use of mobile money is a dummy variable that equals to 1 if
respondents use mobile money, and 0 otherwise. The excluded instruments are distance to the nearest agent and the capacity to
perform monetary transactions using cell phone. Robust standard errors in brackets. We use a logistic model specify in equation
(4). *** Significant at the 1% level, ** Significant at the 5% level, * Significant at the 10% level.
34
Table 10. IV Results. Choice of deposit instruments and mobile money adoption / individuals
participating in informal financial mechanisms.
Full sample
Pr (MM user)
Controls included
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of
coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Pr (MM user)
Pr (MM user) x Participating in
informal mechanisms
Participating in informal mechanisms x
Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of
Deposit in formal
institutions
Deposit in
bank
account
Deposit in credit
union account
(1)
-0.158
(0.296)
(2)
0.431
(0.317)
(3)
-0.155
(0.250)
Deposit in
mobile
money
account
(4)
4.871***
(0.521)
YES
YES
YES
YES
YES
377
0.199
63.61***
377
0.343
77.12***
377
0.049
23.50**
376
0.552
135.27***
167
0.296
56.82***
131.94***
205.97***
60.22***
313.98***
17.96
68.91%
76.36%
66.88%
87.00%
60.73%
62.37%
91.50%
82.96%
91.88%
57.14%
Deposit using
informal
mechanisms
(5)
-1.785***
(0.582)
Individuals participating in informal financial mechanisms
Deposit in formal
Deposit in credit union
Deposit in bank account
institutions
account
Total
Total
Total effect
effect
effect
(1)
(2)
(3)
(4)
(5)
(6)
40.655***
22.525***
-0.440
(0.464)
(5.595)
(1.654)
-40.968
-0.313
21.197***
1.328**
0.213
-0.228
(0.000)
(0.464)
(5.530)
(0.559)
(1.711)
(0.436)
YES
YES
176
0.2670
176
0.490
38.35***
YES
176
0.177
39.81***
359.05**
328.47***
428.30***
coefficients)
*
% correct prediction (y=1)
86.73%
77.19%
80.00%
% correct prediction (y=0)
55.56%
91.60%
56.58%
Notes: Pr (MM user) is the independent variable of interest that is the predicted value of mobile money use that we obtain from the reduced form
estimation in Table 9. Robust standard errors in brackets. *** Significant at the 1% level, ** Significant at the 5% level, * Significant at the 10%
level.
In Table 10, 11 and 12, we replicate our estimations in section 5 (results) using the predicted value of
mobile money use. The findings are consistent with our previous results.
35
Table 11. IV Results. Choice of deposit instruments and mobile money adoption: Low,
irregular vs. High, regular income.
Pr (MM user)
Low income
Pr (MM user) x Low income
Controls
Low income x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity
of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Pr (MM user)
Irregular income
Pr (MM user) x Irregular income
Controls
Irregular income x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity
of coefficients)
Deposit in formal
institutions
Total
effect
(1)
(2)
1.005*
(0.526)
11.302**
(5.519)
-1.734***
-0.729
(0.654)
(0.389)
YES
YES
377
0.217
67.06***
Low vs. High income
Deposit in bank
account
Total
effect
(3)
(4)
0.756*
(0.422)
-0.786
(5.957)
-0.690
0.066
(0.656)
(0.502)
YES
YES
377
0.332
95.02***
140.46***
200.74***
91.58***
68.54%
78.18%
70.13%
85.65%
62.83%
71.51%
Deposit in formal
institutions
Total
effect
(1)
(2)
0.055
(0.476)
-7.509
(6.419)
-0.257
(0.637)
YES
YES
377
0.255
71.46***
157.60***
Irregular vs. Regular income
Deposit in bank
account
Total
effect
(3)
(4)
-0.098
(0.450)
7.824
-0.202
(0.424)
(6.897)
1.228
(0.752)
YES
YES
377
0.394
110.31***
232.00***
1.130*
(0.603)
Deposit in credit union
(5)
0.123
(0.362)
8.804*
(5.003)
-0.662
(0.534)
YES
YES
377
0.109
45.55***
Total
effect
(6)
-0.539
(0.393)
Deposit in credit union
(5)
0.136
(0.349)
21.185***
(6.835)
-0.414
(0.530)
YES
YES
377
0.121
45.28***
Total
effect
(6)
-0.278
(0.398)
97.79***
% correct prediction (y=1)
71.54%
72.08%
67.54%
% correct prediction (y=0)
79.09%
87.89%
67.74%
Notes: Pr (MM user) is the independent variable of interest that is the predicted value of mobile money use that we obtain from
the reduced form estimation in Table 9. Robust standard errors in brackets. *** Significant at the 1% level, ** Significant at the
5% level, * Significant at the 10% level.
36
Table 12. IV Results. Choice of deposit instruments and mobile money adoption: Low vs. High access to
formal finance.
Pr (MM user)
Rural
Pr (MM user) x Rural
Controls
Rural x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Pr (MM user)
Female
Pr (MM user) x Female
Controls
Female x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Pr (MM user)
Less educated
Pr (MM user) x Less educated
Controls
Less educated x Controls
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Deposit in formal institutions
Total effect
(1)
(2)
-0.264
(0.419)
-5.864
(6.628)
0.186
-0.078
(0.608)
(0.441)
YES
YES
377
0.212
69.56***
138.12***
68.16%
79.09%
Rural vs. Urban
Deposit in bank account
Total effect
(3)
(4)
0.833*
(0.427)
8.041
(7.003)
-0.968
-0.135
(0.644)
(0.482)
YES
YES
377
0.394
95.71***
232.10***
72.73%
88.34%
Deposit in credit union
Total effect
(5)
(6)
-0.280
(0.370)
-7.560
(5.240)
0.263
-0.017
(0.519)
(0.365)
YES
YES
377
0.089
32.36*
81.15***
71.20%
61.29%
Deposit in formal institutions
Total effect
(1)
(2)
-0.105
(0.480)
4.871
(5.006)
-0.061
-0.166
(0.626)
(0.402)
YES
YES
377
0.210
76.32***
137.13***
69.66%
78.18%
Female vs. Male
Deposit in bank account
Total effect
(3)
(4)
-0.332
(0.439)
14.721**
(5.768)
1.517**
1.185**
(0.713)
(0.562)
YES
YES
377
0.394
100.50***
232.18***
74.68%
85.65%
Deposit in credit union
Total effect
(5)
(6)
-0.318
(0.358)
-6.766
(4.756)
0.345
0.027
(0.523)
(0.381)
YES
YES
377
0.087
40.68**
80.27***
64.92%
61.83%
Deposit in formal institutions
Total effect
(1)
(2)
-0.555
(0.460)
8.973*
(5.418)
1.153*
0.597
(0.610)
(0.401)
YES
YES
377
0.218
207.40***
140.90***
68.16%
80.00%
Less vs. High educated
Deposit in bank account
Total effect
(3)
(4)
0.522
(0.381)
12.824*
(7.559)
0.643
1.166**
(0.702)
(0.590)
YES
YES
377
0.347
303.04***
208.07***
66.88%
85.65%
Deposit in credit union
Total effect
(5)
(6)
-0.639*
(0.344)
7.101
(5.189)
1.269**
0.631*
(0.515)
(0.384)
YES
YES
377
0.100
218.76***
87.01***
70.16%
61.83%
Notes: Pr (MM user) is the independent variable of interest that is the predicted value of mobile money use that we obtain from the reduced form
estimation in Table 9. Robust standard errors in brackets. *** Significant at the 1% level, ** Significant at the 5% level, * Significant at the 10%
level.
37
Table 13. IV Results. Factors affecting the choice of making deposit using mobile money account.
Risk
(1)
Pr (MM user) x
Attributes of
informal/mobile
money
Full sample
Deposit using mobile money account
Attributes of Formal/Mobile money
Attributes of Informal/Mobile money
Cost
Illiquidity
Low quality
Risk
Cost
Illiquidity
Low quality
(2)
(3)
(4)
(5)
(6)
(7)
(8)
2.203
3.592
-1.696
-2.070
12.554**
-8.316
-8.977
1.249
(4.890)
(3.662)
(4.157)
(2.180)
(4.919)
(6.364)
(7.001)
(2.250)
-1.724
0.640
3.276
4.540***
-11.560**
9.480
10.154
0.619
(4.933)
(3.609)
(4.372)
(1.756)
(4.768)
(6.321)
(7.181)
(1.838)
Controls included
NO
NO
NO
YES
NO
NO
NO
YES
Pr (MM user) x
Controls included
YES
YES
YES
YES
YES
YES
YES
YES
Total effect
0.478
(0.660)
4.233***
(1.367)
1.580**
(0.708)
2.470**
(1.049)
0.994**
.4843047
1.165
(1.297)
1.177*
(0.695)
1.868**
(0.781)
Observations
Pseudo R2
Wald χ2 (H0:
145
0.117
145
0.303
145
0.190
340
0.6188
86
0.474
85
0.439
85
0.445
345
0.6015
nullity of
coefficients)
18.44
25.01**
27.96***
140.11***
35.25***
38.84***
31.75***
155.57***
424.10***
448.83***
433.83***
365.63***
492.70***
489.79***
490.31***
354.96***
Attributes of
informal/mobile
money
Likelihood ratio
test χ2 (H0: nullity
of coefficients)
% correct
95.00%
92.50%
94.17%
91.55%
86.36%
92.31%
92.31%
88.89%
prediction (y=1)
% correct
16.00%
56.00%
32.00%
87.37%
80.00%
70.00%
70.00%
87.56%
prediction (y=0)
Note: Pr (MM user) is the independent variable of interest that is the predicted value of mobile money use that we obtain from the reduced
form estimation in Table 9. Robust standard errors in brackets. In columns 4 and 8, we add the variable MM user used in the interaction
terms in the controls variables. We use a logistic model specify in equation (3). Controls included: age, age squared, married, rural, male,
occupation, irregular incomes, person in charge, education level, incomes level and incomes squared. Table A.2. in the Appendix gives
definitions and summary statistics of the attributes of formal and informal financial mechanisms that consist of risk, cost, illiquidity and
low quality. *** Significant at the 1% level, ** Significant at the 5% level, * Significant at the 10% level.
Table 13 shows the estimations for the attributes related to formal and informal financial
mechanisms compared to those related to mobile money that may induce mobile money users to make
deposit in the mobile money account. The results are similar to our previous findings that cost,
illiquidity and low quality associated with formal financial methods compared to those related to mobile
money, are attributes that may lead mobile money users to make deposit in the mobile money account.
Considering informal financial mechanisms, we also find the coefficient of risk related to informal
financial mechanisms compared to those of mobile money positive and significant. Thus, the risk
associated with informal financial methods compared to those of mobile money, is a factor that may also
lead mobile money users to make deposit in the mobile money account.
38
8. Conclusion
This paper examines the effect of mobile money as a substitute or a complement of
informal and formal financial instruments, and its potential to enhance financial access for
disadvantaged individuals. In developing countries, the predominance of informal finance
associated with the underdeveloped formal financial system raises questions about the effect the
growing technology of mobile money may have on the improvement of financial access. The
paper addresses this issue. We use an original dataset obtained from a survey we conducted in
Burkina Faso in May 2014, and find that while the use of mobile money has no impact on deposit
using formal financial instruments, it decreases the likelihood to use informal deposit
mechanisms. Our findings also show that mobile money increases the likelihood of individuals
who participate in informal mechanisms to make deposit using formal financial instrumentsbank and credit union accounts. In further investigations, we show that among disadvantaged
groups, mobile money increases the likelihood of female, individuals with irregular income and
those who are less educated to make deposit in bank and credit union accounts. The mechanisms
underlying these results reveal that cost, illiquidity and low quality associated with formal
financial methods compared to those related to mobile money are attributes that may lead
individuals to use mobile money account to make deposit. Similarly, we find that perception of
risk, illiquidity and low quality associated with informal deposit mechanisms compared to those
of mobile money increase the likelihood of individuals to make deposit using mobile money
account.
Inadequate access to financial services is widespread in Burkina Faso. Mounting evidence
suggest that various socioeconomic constraints depress savings/deposits even among those with
access (Allan, Massu, and Svarer 2013; Kendall 2010; Kendall et al. 2011). In settings where the
technology of mobile money exists, bridging the gap in individuals’ access to formal financial
services is not overstating. However, the banking system regulations need to be adjusted to take
into account the new scalable technology-enabled business models. In fact, in Burkina Faso,
mobile money is operated in partnership between banks and mobile network operators that render
difficult the supervision of mobile money services. Thus, it is critical for the Central Bank
(BCEAO) and the “Autorité de régulation des communications électroniques” to build strong and
adequate regulation framework and supervision to support the wide range of services, especially
39
deposits/savings services that can be provided through mobile money. Although mobile money
services are mobiquity (mobility and ubiquity), mobile money providers have inclination to
concentrate their services in locations where formal activities are already available especially in
urban areas. Government and policymakers may act through specific strategies to motivate
mobile money providers to reach remote areas to ensure access to basic formal financial services
throughout the country. Expanding mobile money agent networks by facilitating retail stores to
start mobile money business especially in rural areas may help reduce the gap in formal financial
access between urban and rural areas. Policies that focus on and motivate female, less educated
and informal savings groups’ access to and usage of mobile money services should also be
encouraged. More specifically, promoting the creation of an informal savings groups mobile
money account linked to individuals’ mobile money account and that allows transfers between
both accounts may reduce the need of cash exchanges and favor electronic money. Thus, mobile
money may in turn bring out individuals from informal financial methods toward formal financial
institutions by increasing the likelihood of individuals to access/use bank and credit union
accounts. However, our results should be interpreted with caution given the lack of data on the
amount allocated to each financial instrument. Further work will be needed to refine the analysis
with detailed data.
40
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Appendix
Table A.1. Correlation matrix. Full sample.
Deposit
using
formal
institution
s
Deposit using
formal institutions
Deposit using banks
Deposit using credit
unions
Deposit using
mobile money
Deposit using
informal
MM user
Depos
it
using
banks
Deposit
using
credit
unions
Deposit
using
mobile
money
Depos
it
using
inform
al
MM
user
Age
Age
square
d
Married
Rural
Male
Occup
ation
Irregular
income
Person
in
charge
Educat
ion
Inco
me
Income
squared
1
0.546
1
0.661
0.023
1
0.088
0.140
0.052
1
-0.042
-0.107
0.109
-0.038
1
0.054
0.137
0.005
0.785
-0.111
1
Age
0.201
0.227
0.013
-0.018
-0.130
-0.027
1
Age squared
0.195
0.223
0.008
-0.036
-0.130
-0.045
0.990
1
Married
0.196
0.162
0.084
0.154
-0.07
0.131
0.607
0.579
1
Rural
-0.006
-0.139
0.005
0.127
-0.176
0.146
0.251
0.245
0.226
1
Male
0.085
0.125
-0.04
0.066
0.028
0.007
0.267
0.254
0.107
0.032
1
Occupation
0.082
-0.014
0.070
-0.107
0.06
-0.078
0.430
0.384
0.348
0.159
0.115
1
Irregular income
-0.097
-0.294
0.145
0.062
-0.047
0.043
0.100
0.08
0.106
0.302
-0.096
0.197
1
Person in charge
0.055
0.066
0.076
0.089
0.057
0.107
-0.003
-0.009
0.024
-0.03
-0.008
0.047
0.015
1
Education
0.275
0.449
0.017
0.185
-0.054
0.162
-0.148
-0.139
-0.169
-0.227
0.017
-0.391
-0.358
-0.013
1
Income
0.359
0.417
0.089
0.086
-0.03
0.071
0.441
0.426
0.358
-0.052
0.271
0.342
-0.131
0.055
0.127
Income squared
0.32
0.407
0.056
0.074
-0.025
0.07
0.427
0.417
0.349
-0.078
0.255
0.297
-0.145
0.063
0.135
1
0.97
7
45
1
Table A.2. Summary statistics and variables description (Mechanisms).
Variable
Definition
Factors related to informal financial mechanisms (Initial measure)
Indicate individuals perception of risk associated with informal mechanisms,
Risk of informal
encoded as (Very lower) = 1, (Lower) = 2, (Medium) = 3, (High) = 4, (Very high) =
5
Indicate individuals perception of cost associated with informal mechanisms,
Cost of informal
encoded as (Very lower) = 1, (Lower) = 2, (Medium) = 3, (High) = 4, (Very high) =
5
Illiquidity of
Indicate individuals perception of illiquidity associated with informal mechanisms,
informal
encoded as (Very low) = 1, (Low) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Low quality of
Indicate individuals perception of quality associated with informal mechanisms,
informal
encoded as (Very low) = 1, (Low) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Factors related to formal financial mechanisms (Initial measure)
Indicate individuals perception of risk associated with formal mechanisms, encoded
Risk of formal
as (Very lower) = 1, (Lower) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Indicate individuals perception of cost associated with formal mechanisms, encoded
Cost of formal
as (Very lower) = 1, (Lower) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Illiquidity of
Indicate individuals perception of illiquidity associated with formal mechanisms,
formal
encoded as (Very low) = 1, (Low) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Low quality of
Indicate individuals perception of quality associated with formal mechanisms,
formal
encoded as (Very low) = 1, (Low) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Factors related to Mobile money (Initial measure)
Risk of mobile
Indicate individuals perception of risk associated with mobile money, encoded as
money
(Very lower) = 1, (Lower) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Cost of mobile
Indicate individuals perception of cost associated with mobile money, encoded as
money
(Very lower) = 1, (Lower) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Illiquidity of
Indicate individuals perception of illiquidity associated with mobile money,
mobile money
encoded as (Very low) = 1, (Low) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Low quality of
Indicate individuals perception of quality associated with mobile money, encoded as
mobile money
(Very low) = 1, (Low) = 2, (Medium) = 3, (High) = 4, (Very high) = 5
Factors related to informal financial mechanisms compared to mobile money (Computed)
Risk of
Indicate the perception of risk associated with informal mechanisms compared to
informal/mobile
mobile money, encoded as (low) = 0.33, (High) = 5
money
Cost of
Indicate the perception of costs associated with informal mechanisms compared to
informal/mobile
mobile money, encoded as (Low) = 0.33, (High) = 5
money
Illiquidity of
Indicate the perception of illiquidity associated with informal mechanisms
informal/mobile
compared to mobile money, encoded as (Low) = 0.67, (High) = 5
money
Low quality of
Indicate the perception of quality associated with informal mechanisms compared to
informal/mobile
mobile money, encoded as (Low) = 0.4, (High) = 5
money
Factors related to formal financial mechanisms compared to mobile money (Computed)
Risk of
Indicate the perception of risk associated with formal mechanisms compared to
formal/mobile
mobile money, encoded as (low) = 0.33, (High) = 3
money
Cost of
Indicate the perception of costs associated with informal mechanisms compared to
formal/mobile
mobile money, encoded as (Low) = 0.5, (High) = 4
money
Illiquidity of
Indicate the perception of illiquidity associated with informal mechanisms
formal/mobile
compared to mobile money, encoded as (Low) = 0.5, (High) = 3
money
Low quality of
Indicate the perception of quality associated with informal mechanisms compared
formal/mobile
to mobile money, encoded as (Low) = 0.2, (High) = 5
money
Obs.
Mean
Std.
Dev.
Min
Max
228
3.39
.93
1
5
229
2.29
.81
1
5
230
3.13
.97
1
5
380
3.01
.65
1
5
283
2.36
0.66
1
4
282
2.94
0.46
1
4
287
2.90
0.54
1
5
376
2.59
0.68
1
5
203
2.35
0.64
1
4
204
2.29
0.71
1
4
203
1.93
0.66
1
5
383
2.55
0.65
1
5
95
1.76
0.79
0.33
5
94
1.11
0.51
0.33
5
94
1.79
0.74
0.67
5
369
1.26
0.50
0.4
5
150
1.03
0.46
0.33
3
150
1.46
0.57
0.5
4
151
1.70
0.66
0.5
3
361
1.05
0.37
0.2
5
46
Table A.3. Correlation matrix (Attributes of formal savings instruments)
Deposit using
MM
Risk
Deposit
using MM
1
Risk
Cost
Illiquidity
Quality
Age
Age
squared
Married
Rural
Male
Occupation
Irregular
income
Person in
charge
Education
Income
-0.014
1
Cost
0.171
0.137
Illiquidity
0.067
0.082
0.345
1
Quality
-0.046
-0.366
-0.277
-0.322
1
Age
-0.018
-0.237
-0.046
0.063
0.205
1
Age squared
-0.036
-0.213
-0.039
0.07
0.193
0.990
1
Married
0.154
-0.234
0.06
0.033
0.131
0.607
0.579
1
Rural
0.127
-0.134
0.145
0.254
-0.098
0.251
0.245
0.226
1
Male
0.066
-0.270
0.039
0.1
-0.007
0.267
0.254
0.107
0.032
1
Occupation
-0.107
-0.15
-0.1
0.013
0.128
0.430
0.384
0.348
0.159
0.115
1
Irregular income
0.062
0.008
0.019
0.082
-0.072
0.100
0.08
0.106
0.302
-0.096
0.197
Person in charge
0.089
0.1
0.030
0.043
-0.052
-0.003
-0.009
0.024
-0.03
-0.008
0.047
0.015
1
Education
0.185
0.016
0.068
0.015
0.093
-0.148
-0.139
-0.169
-0.227
0.017
-0.391
-0.358
-0.013
1
Income
0.086
-0.243
-0.120
-0.164
0.221
0.441
0.426
0.358
-0.052
0.271
0.342
-0.131
0.055
0.127
1
Income squared
0.074
-0.236
-0.132
-0.174
0.206
0.427
0.417
0.349
-0.078
0.255
0.297
-0.145
0.063
0.135
0.977
Income
squared
1
1
47
1
Table A.4. Correlation matrix (Attributes of informal savings mechanisms)
Deposit using MM
Risk
Cost
Illiquidity
Quality
Age
Age squared
Married
Rural
Male
Occupation
Irregular income
Person in charge
Education
Income
Income squared
Deposit
using MM
1
0.056
0.065
0.224
-0.229
-0.018
-0.036
0.154
0.127
0.066
-0.107
0.062
0.089
0.185
0.086
0.074
Risk
Cost
Illiquidity
Quality
Age
1
0.047
0.356
-0.188
-0.2
-0.193
-0.196
-0.048
-0.147
-0.2
-0.124
0.026
0.255
-0.116
-0.133
1
0.215
-0.062
0.008
-0.012
0.007
0.308
-0.023
0.039
0.050
-0.010
-0.096
-0.066
-0.048
1
-0.23
-0.121
-0.105
-0.002
-0.097
-0.085
-0.166
-0.19
0.092
0.278
0.052
0.041
1
-0.002
0.006
-0.033
-0.308
-0.114
0.089
-0.009
0.013
-0.151
0.044
0.042
1
0.990
0.607
0.251
0.267
0.430
0.100
-0.003
-0.148
0.441
0.427
Age
squared
1
0.579
0.245
0.254
0.384
0.08
-0.009
-0.139
0.426
0.417
Married
Rural
Male
Occupation
1
0.226
0.107
0.349
0.106
0.024
-0.169
0.358
0.349
1
0.032
0.159
0.302
-0.03
-0.227
-0.052
-0.078
1
0.115
-0.096
-0.008
0.017
0.271
0.255
1
0.197
0.047
-0.391
0.342
0.297
Irregular
income
Person in
charge
1
0.015
-0.358
-0.131
-0.145
1
-0.013
0.055
0.063
Education
Income
1
0.127
0.135
1
0.977
Income
squared
1
48
Table A.5. Correlation matrix (Reduced form for predicting the use of mobile money).
MM user
MM user
Distance to
the nearest
agent
Capacity to
perform
monetary
transactions
via cell
phone
Age
Age
squared
Married
Distance
to the
nearest
agent
Capacity to
perform
monetary
transactions
via cell
phone
Age
Age
squared
Married
Rural
Male
Occupation
Irregular
income
Person in
charge
Education
Income
1
-0.888
1
0.464
-0.368
1
-0.027
0.043
-0.041
1
-0.045
0.060
-0.055
0.990
1
0.131
-0.070
0.128
0.607
0.579
1
0.146
-0.088
-0.039
0.251
0.245
0.226
1
Male
0.007
0.009
0.035
0.267
0.254
0.107
0.032
1
Occupation
-0.078
0.069
-0.154
0.430
0.384
0.348
0.159
0.115
1
0.043
-0.030
0.015
0.100
0.080
0.106
0.302
-0.096
0.197
1
0.107
-0.097
-0.007
-0.003
-0.009
0.024
-0.030
-0.008
0.047
0.015
1
Education
0.162
-0.126
0.366
-0.148
-0.139
-0.169
-0.227
0.017
-0.391
-0.358
-0.013
1
Income
0.071
-0.043
0.133
0.441
0.426
0.358
-0.052
0.271
0.342
-0.131
0.055
0.127
1
Income
squared
0.070
-0.047
0.1161
0.427
0.417
0.349
-0.078
0.255
0.297
-0.145
0.063
0.135
0.977
Rural
Irregular
income
Person in
charge
Income
squared
49
1
Table A.6. Deposit in mobile money account and the use of mobile money for subsamples. (IV Results are
also reported).b
MM user
Participating in
informal
mechanisms
(1)
27.449***
Total effect
Controls included
Subsample variable x Controls included
Observations
Pseudo R2
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
% correct prediction (y=1)
% correct prediction (y=0)
Total effect
(5)
5.748***
(6)
6.642***
(1.093)
(1.206)
(0.821)
(1.266)
-21.521***
25.976**
(10.564)
-1.325
12.763*
(6.638)
-15.578***
-2.715
(8.942)
-1.264
2.801
(8.723)
-0.521
-9.375
(6.554)
-2.231
(7.566)
(1.314)
(1.332)
(1.467)
(1.262)
(1.453)
5.928***
(1.026)
4.990***
(0.838)
4.678***
(0.752)
5.051***
(0.836)
5.227***
(0.959)
4.411***
(0.713)
NO
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
178
0.6415
1745.57***
459.76***
88.52%
89.74%
378
0.627
130.03***
351.11***
90.91%
87.05%
378
0.641
378
0.634
106.22***
354.72***
92.21%
87.95%
378
0.630
133.92***
352.84***
93.51%
86.61%
381
0.616
327.80***
344.55***
94.16%
86.34%
Female
vs. Male
Less vs. High
educated
(6)
6.044***
(0.860)
-7.858
(6.552)
358.46***
92.21%
86.61%
Deposit in mobile money account
Low vs.
Irregular vs.
Rural vs.
High
Regular
Urban
income
income
(1)
(2)
(3)
(4)
(5)
27.653***
5.278***
6.933***
6.509***
5.348***
(8.329)
(0.648)
(0.814)
(1.250)
(0.740)
-21.645***
(7.755)
21.253**
(8.839)
-0.200
(1.088)
0.290
(6.747)
-2.388**
(1.137)
-3.842
(9.170)
-1.894
(1.433)
-0.319
(7.725)
-0.158
(1.161)
6.008***
(1.061)
5.077***
(0.874)
4.545***
(0.794)
4.614***
(0.701)
5.190***
(0.894)
Subsample
Pr (MM user) x Subsample variable
Less vs. High
educated
(1.012)
Participating in
informal
mechanisms
Pr (MM user)
Female
vs. Male
(8.140)
Subsample
MM user x Subsample variable
Subsamples
Deposit in mobile money account
Low vs.
Irregular vs.
Rural vs.
High
Regular
Urban
income
income
(2)
(3)
(4)
6.315***
20.255***
6.314***
-1.972*
(1.090)
4.072***
(0.669)
Controls included
Subsample variable x Controls included
Observations
Pseudo R2
NO
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
176
376
376
376
376
376
0.642
0.587
0.610
0.604
0.602
0.578
1793.43***
158.96***
160.83***
119.91*** 137.16***
336.32***
Wald χ2 (H0: nullity of coefficients)
Likelihood ratio test χ2 (H0: nullity of coefficients)
460.88***
331.72***
343.79***
340.54*** 339.32***
327.52***
% correct prediction (y=1)
88.33%
90.20%
90.85%
90.85%
92.16%
88.24%
% correct prediction (y=0)
90.52%
87.44%
87.00%
87.44%
86.10%
87.00%
Notes: Dependent variable: deposit in mobile money account is a dummy that takes the value 1 if respondents make deposit using mobile money
account, and 0 otherwise. Pr (MM user) is the independent variable of interest that is the predicted value of mobile money use that we obtain from the
reduced form estimation in Table 9. Robust standard errors in brackets. Subsamples are defined as follow: we compare individuals participating in
informal mechanisms to those who don’t; Low to High income individuals; Irregular to Regular income; Individuals located in Rural to those in
Urban area; Female to Male; and Less to High educated individuals. Controls included: age, age squared, married, rural, male, occupation, irregular
incomes, person in charge, education level, incomes level and incomes squared. *** Significant at the 1% level, ** Significant at the 5% level, *
Significant at the 10% level.
50
Table A.7. Deposit using informal mechanisms and the use of mobile money for subsamples. (IV Results are also reported).
Subsamples
Deposit using informal mechanisms
Irregular vs.
Rural vs.
Regular
Urban
income
(Predicted value of MM user)
(7)
(8)
-6.273***
-7.193***
Low vs. High
income
Irregular vs.
Regular income
Rural vs.
Urban
Female vs.
Male
Less vs. High
educated
Low vs. High
income
(1)
-5.158***
(2)
-4.641**
(3)
-7.197***
(4)
-5.585***
(5)
10.854***
(6)
-7.373***
(0.981)
(1.976)
(1.383)
(1.147)
(1.244)
(1.640)
(0.892)
-66.102***
(12.359)
25.738
(0.000)
292.922
(0.000)
-151.465
(0.000)
-101.934
(0.000)
-103.575***
(17.007)
-1.593
-10.061***
5.836***
4.817***
-40.957***
(2.326)
(3.083)
(1.428)
(1.351)
-6.750***
(2.110)
-14.702***
(1.212)
-1.361**
(0.575)
Controls included
YES
YES
Subsample variable x
Controls included
YES
MM user
Subsample
MM user x Subsample
variable
Total effect
Observations
Pseudo R2
Wald χ2 (H0: nullity of
Female vs.
Male
Less vs. High
educated
(9)
-5.728***
(10)
11.204
(1.475)
(1.150)
(21.378)
27.304
(0.000)
260.802
(0.000)
-135.783
(0.000)
1,218.140
(0.000)
-25.216**
-57.164*
4.356***
4.404***
-747.777
(3.333)
(12.162)
(30.216)
(1.657)
(1.084)
(0.000)
0.768
(0.906)
-30.103***
(3.042)
-32.589***
(12.028)
-63.436**
(30.199)
-2.838**
(1.185)
-1.324
(1.027)
-736.573***
(21.378)
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
143
0.705
169
0.690
169
0.649
169
0.520
169
0.794
141
0.789
167
0.730
167
0.674
167
0.531
167
1.000
42.38***
40.79***
38.41***
30.86***
46.84***
47.11***
43.19***
39.90***
31.60**
58.86***
coefficients)
Likelihood ratio test
χ2 (H0: nullity of
coefficients)
% correct prediction
99.26%
97.53%
97.53%
97.53%
99.38%
99.25%
98.75%
100.00%
100.00%
100.00%
(y=1)
% correct prediction
57.14%
71.43%
57.14%
57.14%
57.14%
71.43%
57.14%
57.14%
42.86%
100.00%
(y=0)
Notes: Notes: Dependent variable: deposit using informal mechanisms is a dummy that takes the value 1 if respondents make deposit using informal financial mechanisms, and 0 otherwise.
Pr (MM user) is the independent variable of interest that is the predicted value of mobile money use that we obtain from the reduced form estimation in Table 9. Robust standard errors in
brackets. Subsamples are defined as follow: we compare individuals with Low income to those with High income individuals; Irregular to Regular income; Individuals located in Rural to
those in Urban areas; Female to Male; and Less to High educated individuals. Controls included: age, age squared, married, rural, male, occupation, irregular incomes, person in charge,
education level, incomes level and incomes squared. *** Significant at the 1% level, ** Significant at the 5% level, * Significant at the 10% level.
51
Table A.8. Data sample characteristics. (Deposit instruments)
Full sample
Gender
Female
Male
Marital situation
Married
Single
Person in charge
Age
< 30
>= 30
Education level
Less than secondary education level
At least secondary education level
Occupation / employment status
Paid activity
Unpaid activity (include student)
Income level and type
Income ranging from 10 000 to 50 000 FCFA
Income more than 50 000 FCFA
Irregular income
Regular income
Individuals that report
Deposit
Deposit
using
using credit
mobile
unions
money
Deposit
using
informal
mechanisms
Full
sample
Mobile
Money users
/
50,37
39,75%
49,14%
40,25%
41,98%
49,38%
50,62%
49,02%
50,98%
41,61%
58,39%
51,26%
48,74%
45,40%
54,60%
64,71%
35,29%
48,40%
50,86%
52,10%
54,90%
45,10%
52,45%
58,39%
41,61%
66,46%
52,76%
46,73%
60,30%
57,67%
42,33%
55,83%
39,41%
60,00%
44,12%
50,62%
49,14%
48,53%
51,47%
38,51%
60,87%
48,24%
51,26%
46,63%
53,37%
61,76%
37,06%
41,73%
57,53%
36,27%
63,73%
19,88%
78,88%
41,71%
57,29%
34,97%
65,03%
43,53%
56,47%
80,99%
15,56%
77,45%
18,14%
82,61%
16,15%
85,93%
13,07%
76,07%
19,63%
80,00%
17,06%
48,64%
51,36%
47,90%
51,60%
43,63%
56,37%
50,00%
49,51%
26,71%
73,29%
29,81%
69,57%
42,21%
57,79%
55,28%
44,72%
40,49%
59,51%
51,53%
47,85%
61,18%
38,82%
44,71%
54,71%
Deposit
using banks
Usage of mobile technology
Mobile phone user
99,26%
99,02%
99,38%
100%
99,39%
MM user
50,37%
/
58,39%
50,25%
97,55%
Usage of deposit instruments
Formal
88,89%
95,10%
Bank
39,75%
46,08%
41,21%
48,47%
Credit Union
49,14%
49,02%
50,93%
52,76%
MM
40,25%
77,94%
49,07%
43,22%
Informal
41,98%
35,78%
32,92%
47,74%
34,97%
Source: Authors’ analysis of the survey data collected in May 2014 in Burkina Faso. Throughout, F CFA (Franc of the African
Financial Community) refers to the local currency. The exchange rate during the survey period was about 500 F CFA = $1 US.
52
98,82%
42,94%
31,18%
55,88%
33,53%