Mobile Money: An Innovative Solution to Reduce Households’ Vulnerability to Economic Shocks

Abstract

Mobile money is an innovative solution to facilitate access to financial services for financially excluded people. This paper assesses the impact of mobile money adoption on households’ vulnerability to economic shocks in Benin. First, using a sequential logit model, the results show that age is the main determinant of the five (5) processes of mobile money adoption. Second, employing a linear probability model with an instrumental variable (LPM-IV) and an extended probit regression model, the results reveal that the use of mobile money increases households’ ability to respond to economic shocks such as death or income loss, illness, harvest failure, and loss of livestock. Third, the use of mobile money favors poor people compared to non-poor. However, women and non-educated benefited less compared to men and educated. Overall, these findings have important policy implications for building household resilience to unforeseen events.