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Development Part One > Eigitalization > Flashcards

Eigitalization Flashcards

1
Q

What is the core to financial wellbeing

A
  • resilience - the response to shocks
  • ## developing countries lack private insurance and public safety nets
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2
Q

what do developing countries have instead of insurance

A

social ties - creating an insurance network

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3
Q

why can social ties be an issue

A
  • can lead to moral hazard / assymetric information and commitment issues
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4
Q

Why would an insurance system be expensive

A

their are large transaction costs
- to diversify you need clients with different risk profiles
- But transcations have to cross geographical space which has costs.
- This limits networks to a small geographic space with often correlated shocks.

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5
Q

What are the benefits of a digital payments system in countries where bank
access is extremely poor?

A

mobile money breaks down the notion that transaction costs are a function of
distance/geography.

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6
Q

what is M-PESA in Kenya

A
  • you can use it on any phone.
  • put money in and out of it.
  • agents can take physical money and give you virtual money and vice versa.
  • no-need for phone credit.
  • not integrated with the banking system.
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7
Q

how did the poor adopt MPESA

A
  • started in 2007
  • it was slowly adopted among the poor
  • in comparison to other goods it was a quick adoption
  • in agriculture the adoption of tech is really slow but this was adopted quickly
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8
Q

How do M- PESA agents compare to the banking system

A

they are 25 times the banking sector in the country

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9
Q

who researched the impact of MPESA on households

A

Jack and suri

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10
Q

what did jack and suri belive that MPESA did

A

M-PESA lowered the transaction costs of P2P (person to person) payments.
- mobile money breaks down the notion that transaction costs are a function of
distance/geography.

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11
Q

what questions did Jack and Suri ask about MPESA (5)

A

what impact it had on households:
- through consumption
- savings
- resilience ti shocks
- earnings/ profits
- personal networks

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12
Q

Jack and suri research design

A

sample: Large household panel survey across most of Kenya (92%)
conducted when: 2008, 2009, 2010, 2011 and 2014.
Yijt = γShockijt + δUserijt + βShockijt × Userijt + θXijt + αi + njt + πt + ϵijt
Shock is a measure of the income shock.
- User is a dummy variable for whether a household uses M-PESA.
- Xijt are control variables.

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13
Q

what were the results of jack and suri research

A
  • A reduction in poverty of 2 percentage points, approx. 196,000 households
    move out of extreme poverty.
  • Approx. 186,000 women switched their main occupation from farming to
    being in a business/retail
  • there were similar results in tanzania, uganda, mozambique and Bangladesh
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14
Q

what did lee et al research

A

the effects of mobile money on consumption education health borrowings and savings

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15
Q

what was lee et al 2021 sample and procedure

A
  • focus on rural families which have migrant worker n Dhaka
  • 30-45 min training on how to use mobile money
  • assistance with paper work and any issues with mobile money
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16
Q

what was lee et al results

A
  • increased consumption and savings in rural households
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17
Q

what did Riley 2022 research about mobile money

A

Can pressure to share money within the household explain why most female business in developing countries remain small and unprofitable

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18
Q

what was the sample and procedure for Riley 2021

A

sample: 3000 female microfinance clients in urban Uganda
- control: cash loan
Mobile account: business labelled mm account + cash loan
mobile disbursement: business labelled MM account + loan on MM account

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19
Q

what are the summary statics for Rileys experiment

A
  • 65% married
  • 60% spouse had a buissness
  • average loan size $400 and average profit $100
  • buissness are highly inventory focused
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20
Q

according to riley 2022 how did mobile money help

A
  • increases woman empowerment through two channels:
  • increasing woman bargaining power within the household
  • better enabling woman to enact their preferences
  • Aker et al., 2016 finds that mobile money transfers raise women’s decision
    making power, spending on children, mobility and save time.
  • Bastian et al., 2018 show that mobile savings accounts increased women’s
    empowerment in Tanzania.
21
Q

what heterogenous treatment effects of social pressures to share money

A
  • married
  • when has money on hand the spouse / family takes it
  • another household business
22
Q

what did Riley et al find

A

mobile money allows to resist family pressure

23
Q

What is one challenge faced by traditional microfinance according to Karlan, Murdoch, and Mullainathan (2010)?

A

Low take up and high costs of delivery.

24
Q

What is an alternative to traditional microfinance that is suggested?

A

Fully digital banking on mobile phones.

25
Q

how does the digital banking work

A
  • utilises a phone
  • uses mobile money
  • ## provides credit and saving
26
Q

How popular is M-Shwari in Kenya?

A

Over 15 million accounts (75% of adults); 1 in 5 Kenyan adults (4.5 million) have an active loan on M-Shwari.

27
Q

What are the terms of an M-Shwari loan?

A

A 30-day loan with a fee of 7.5% per month; the first loan ranges between $1 and $100.

28
Q

What factors influence an M-Shwari credit score?

A

M-PESA transactions, airtime expenses, airtime loans, and airtime transfers.

29
Q

What happens if a loan is repaid on M-Shwari?

A

The loan limit increases if the loan is repaid and with savings.

30
Q

What is the consequence of non-payment after 120 days on M-Shwari?

A

The account is reported to the credit bureau.

31
Q

What was the key focus of the first paper by Bharadwaj, Jack, and Suri (2021)?

A

The effects of access to digital credit on outcomes.

32
Q

What was the take-up rate around the credit score cutoff in the study?

A

34% of those eligible took it up, much higher than other forms of formal financial access (1-5%).

33
Q

Did digital credit on M-Shwari substitute for other forms of credit?

A

No, it led to true expansion, not substitution for other forms of formal/informal credit.

34
Q

What improvements were noted from access to digital credit?

A

Improved resilience and a higher propensity to spend on education.

35
Q

What outcomes were not affected by access to digital credit in the study?

A

Overall consumption, assets, and employment.

36
Q

higgins 2021- buissness fin tech reserarch question

A

Do coordination failures constrain financial
technology adoption?

37
Q

what did Higgins do 2021

A
  • Exploit natural experiment that shocked financial technology
    Mexico distributed 1 million debit cards to cash transfer beneficiaries. (Prospera)
  • Combine administrative data on debit card rollout with rich collection of
    microdata on consumers and retail firms.
38
Q

What was the purpose of Mexico’s Prospera program from 2009-2012?

A

To distribute about 1 million debit cards to urban localities (population > 15K).

39
Q

Who were the recipients of the Prospera program before the intervention?

A

Urban recipients of the government cash transfer program receiving transfers in a Bansefi bank account, paid every two months.
Flashcard 3

40
Q

What was the intervention in the Prospera program?

A

Issuing Visa debit cards attached to the recipients’ accounts.

41
Q

What functionalities did the Visa debit cards provide to recipients?

A

They could withdraw funds from any bank’s ATM and use the debit cards at stores accepting Visa.

42
Q

What is required for the low-adoption equilibrium in the Prospera program?

A

Network externalities and fixed costs of adoption.

43
Q

What was a barrier to the adoption of non-bank e-payment companies like Square before 2013?

A

They did not enter the market until 2013.

44
Q

What potential tax cost was frequently mentioned in focus groups?

A

Non-monetary costs, such as paperwork, although formal registration was not required.

45
Q

What were the effects of the intervention on corner stores according to Higgins (2021)?

A

Sales increased by 6% and profits increased without cost increases.

46
Q

How did the intervention affect supermarkets?

A

Sales decreased by 12%, inventory costs decreased, and there was a small reduction in profits.

47
Q

What were the estimated welfare gains from the intervention?

A

Over half of the total consumer gains were spillovers, implying large indirect network externalities.

48
Q

How did consumer gains from spillovers compare to the costs of the debit card rollout?

A

Consumer gains from spillovers exceeded the debit card rollout costs by 37 times.

4o

Development Part One (5 decks)

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