In an earlier post, I showed how over the past few years M-PESA and other kinds of “mobile money” have made sending money across the world as easy as sending a text message, while also facilitating commerce and financial inclusion in developing nations around the world. It’s only recently, though, that experts have tried to quantify how these products have benefited the poor.

Mobile money technology has shown enormous potential to place the sort of competitive pressures on government-issued currencies that might compel them to rein in their bad behavior.In their recent study “The long-run poverty and gender impacts of mobile money,” Tavneet Suri and William Jack assess mobile money’s contribution to poverty alleviation in Kenya, the country where the “mobile money revolution” began.

Complementary products like the interest-earning mobile banking service M-Shwari and retail payment platform Lipa na M-PESA have only added to its popularity.

From surveys they conducted between 2008 and 2014, Suri and Jack find that M-PESA has lifted 194,000 Kenyan households—about 2 percent of them—out of poverty. It has done so, they conclude, mainly by making it easier for the poor to protect themselves against negative shocks to their wealth and income stemming from events such as bad harvests and general economic downturns. This enables poor citizens to enjoy a more stable and predictable flow of income and therefore have a smoother pattern of spending over time.

It has also given poor families access to safe, interest-earning savings accounts. Suri and Jack also show that those parts of Kenya that have had better access to mobile money “agents” (mini-bank branches that enable M-PESA customers to deposit and withdraw cash in exchange for mobile money) enjoyed the greatest benefits because they were able to enjoy a steadier flow of income from remittances and make more purchases…. read more here