The Original Study
M-PESA, a mobile phone-based service for transferring money, provides a gateway to formal financial services for populations that otherwise would not have access to those services. Jack and Suri analyse a panel of 2,282 Kenyan households over the period 2008 – 2010 to estimate how M-PESA has enabled financial risk sharing. They focus on negative economic shocks, such as illness or drought, and analyse how family members and friends share financial resources during these adverse events. They conclude that M-PESA users, relative to non-users, are largely able to protect their consumption when faced with negative income shocks. They are more likely to receive remittances in the face of negative shocks, receiving both a greater number and higher value of remittances. They also receive remittances over greater distances and from a wider network.
The Replication
This replication study starts with a pure replication of Jack and Suri to reproduce the original study’s results. It then follows this up with consistency tests and robustness checks such as a placebo test, propensity score matching, and Tobit model estimation. Heterogeneous effects are explored by comparing benefits across urban and rural residents. The latter are expected to particularly benefit from M-PESA, as they are more likely to be excluded from formal financial services.