Project: Promoting Migrant Remittances Using Mobile Banking: Evidence from a Field Experiment
Click here for more information of the researchers of this project.
Recent research has shown that migrant remittances are extremely important sources of funding for developing countries, as they are generally large in magnitude and stable in times of macroeconomic volatility. But there is still much to be learned about remittance flows in this context, both in terms of their determinants and consequences.
This research project aims firstly at answering broad questions regarding the determinants and consequences of migrant remittances. In particular, we examine whether the availability of a new remittance channel, as is the case of mobile money, can increase the magnitude and frequency of migrant remittance flows. Our project is also designed to understand the determinants of migrant remittances flows in this context of the availability of this new remittance channel. Namely, our design examines the importance of remittance costs in influencing migrants’ decisions to remit, relative to trust in the remittance channel. We aim to answer questions such as: How much higher are remittance flows when the cost of remitting falls? Do lower remittance costs change the frequency of remittances? And what about the impact of trying a new remittance service on its usage patterns? We further propose to measure the consequences of remittances sent by migrants using mobile money to households in their areas of origin.
It is our aim to answer these research questions using a methodology as rigorous as possible. For this purpose, we propose to conduct a randomised control trial – i.e. a field experiment under which a new remittance channel (mobile money) is offered to a randomly chosen subset of the sample to be followed in our study. In this way, we hope to be able to establish precise causal relations between remittance flows and their determinants (namely remittance cost and trust in the remittance channel), as well as between remittance flows and their development consequences for rural areas.
The project implementation happens in the context of the randomised introduction of newly available mobile money technology in rural Mozambique, which our research team conducted during June to August 2012. This randomised intervention was implemented in 102 rural areas in the three southern provinces of Mozambique, where mobile money agents were randomly placed and (individual and community level) dissemination activities conducted in the 51 treatment areas. In addition, urban migrants from the rural families in our sample were recruited and contacted face-to-face to offer the possibility of transferring money to their rural relatives using mobile money.
In recontacting all available rural households and urban migrants in our sample, this project seeks to evaluate:
- the impact of three different dissemination strategies of mobile money transfers among urban migrants: in particular, a first group is being offered a 50% subsidised transfer price; a second group is offered an equivalent amount of trial e-money (about 15 EUR or 15% of the average monthly wage) so that it can experiment the remittance channel and gain trust in the service in this way; and a last control group is simply told and shown on spot (as also happens with all other urban migrants) how the transfer service works; comparing remittance behaviour for the three groups should provide relevant experimental evidence on the relative importance of the remittance costs vs. trust in the remittance channel in determining migrant remittance behaviour; this evidence will be complemented with repeated behavioural data and survey data on previous remittance habits;
- the consequences of changes in the frequency and magnitude of migrant remittances happening as a result of the randomised introduction of mobile money services on a broad array of individual, household and community level outcomes in the rural areas where migrants originate from; some of these outcomes are sectoral diversification and new business startups, investment in human capital, or increased migratory behaviour.
In order to measure the effects of the proposed experimental interventions, we will use administrative records from our partner Carteira Movel (the first and largest mobile money provider in Mozambique to date), in addition to behavioural measures obtained by playing lab-in-the-field type of games with the individuals in our sample, and tailored survey measures. For more information please click here.
This work builds on preparatory fieldwork conducted in June to August 2012, when our research team randomly introduced in isolated, rural areas of Mozambique a new mobile money remittance technology that brought an instant, accessible, safe and inexpensive way for money transfers between households. Initial adoption levels were rather encouraging, with more than half of the rural households conducting transactions after dissemination efforts, according to the mobile money company’s administrative records.
Click here for a video of earlier work performed in 2012 in rural areas of Southern Mozambique.