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Electronic payment technology and business finance: A randomized, controlled trial with mobile money
Dalton,Patricio van Soest,Daan Uras,Burak
Dalton,Patricio
van Soest,Daan
Uras,Burak
Abstract
We conducted a randomized, controlled trial with small- and medium-sized enterprises in Kenya to estimate the causal impact of an electronic payment (e-payment) technology on business finance. Using an encouragement design, we exogenously increased e-payment usage among a random subset of firms by relaxing adoption transaction costs and information barriers. Sixteen months after the intervention, we find that the e-payment technology increased access to mobile loans (in the number of loans as well as in the amount borrowed) by at least 50% (0.17 standard deviation), likely because of the reduction of information asymmetries brought by an increase in digital transactions. We find no effect of the e-payment technology on sales and profits, but we do find a reduction of sales volatility and precautionary investment, especially for smaller firms. This suggests that mobile loans help smaller firms cope with short-term negative shocks. We provide a stylized model of business finance that rationalizes these findings.
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Publisher Copyright: © 2024 INFORMS Inst.for Operations Res.and the Management Sciences. All rights reserved.
Date
2024-04
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mnsc.2023.4821.pdf
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Keywords
E-payments, Financial integration, Mobile money, SME finance, SDG 8 - Decent Work and Economic Growth, SDG 9 - Industry, Innovation, and Infrastructure, SDG 17 - Partnerships for the Goals
Citation
Dalton, P, van Soest, D & Uras, B 2024, 'Electronic payment technology and business finance : A randomized, controlled trial with mobile money', Management Science, vol. 70, no. 4, pp. 2590-2625. https://doi.org/10.1287/mnsc.2023.4821