pathways to financial inclusion: experimental evidence...
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TAREK GHANI – WASHU OLIN
PathwaystoFinancialInclusion:ExperimentalEvidencefromAfghanistan
TarekGhani (WashU Olin)JointwithJoshuaBlumenstock (UCBerkeley)andMichaelCallen(UCSanDiego)
TAREK GHANI – WASHU OLIN
PolicyMotivation• Mobilemoneyopenssubstantialscopeforfinancialinnovation
• 40%increaseto100Musersin2014,255+servicesworldwide(GSMA)
• Yetpenetrationisfarfromuniversal– someleaders,manylaggards
ARGARMBGD BEN BOL
BWA
BRABFA
BDI
KHM
CMR
TCDCHL
COL
ZAR
COG
CIV
DOMEGYSLV
ETH
GAB
GHA
GTM GINHTIHNDIND
IDN
IRNJAMJOR
MDG MWIMYS
MLI
MRT
MUSMEX
MNG
MMR
NAM
NPL NICNERNGA
PAK
PANPER
PHLROM
RWA
SENSLE
SGP
SOM
ZAF
LKA
TZA
THA TGOTUN TUR
UGA
ARE
VENVNM
ZMB
ZWE
AFG
KEN
020
4060
Mob
ile A
ccou
nt (%
age
15+
) - G
loba
l Fin
dex
2014
2000m1 2005m1 2010m1 2015m1First Mobile Money Deployment - GSMA 2016
TAREK GHANI – WASHU OLIN
WhatcanwelearnfromAfghanistan?
• Limitedinfrastructureandlimitedtrustinbankingsystem;significantchallengesofinstability,violence,andcorruption
• 10%banked,4%saveformally,32%literacy(WorldBank)
• Widespreadadoptionofmobilephonesinlast15years• From25,000subscribersin2002to20M+now(WorldBank)• Competitivemarket:4privateoperatorsand1state-ownedoperator
3goalsfortoday:1. Introducea“lowerbound”caseforfinancialinclusion2. Summarize5yearsofethnographic&experimentalresearch3. Previewwhat’scomingnextwithgovernmentmobilesalaries
TAREK GHANI – WASHU OLIN
Background:ResearchEngagement• Researchpartner:
– Largesttelecom,nationwidecoverage,6.5M+subs– LaunchedM-Paisa(mobilemoneyplatform)in2008
• Providesstorageofvalue&meansofexchange,• Backedbynetworkofagents(“humanATMs”)
• Collaborations• Effectivenessofmobilesalarypayments(2014,2016)• Automaticcontributionstomobilesavingsaccounts(2016)• Usingmobilephonedatatomeasurevulnerability(2016)
TAREK GHANI – WASHU OLIN
M-PaisaTransactionVolumes
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M-PaisaTransactionAmounts
TAREK GHANI – WASHU OLIN
1st Project:Overview(2015,2016)
• Howdomobilesalariesaffectaccountusage?• AndhowdoesviolenceaffectMMadoption?1. Geolocate universeofM-Paisausersandviolentevents2. Randomizedrolloutofmobilesalariesto341Afghan
employeesoflargedevelopmentcontractor(CADG)
• Keyresults1. 50%costsavingsforemployerrelativetocashsystem2. Largeincreasesinmicro-savings&airtimepurchases3. Violenceexposureand expectationsdecreasetakeup;
80%ofextrawithdrawalssubstituteintocashholdings
TAREK GHANI – WASHU OLIN
M-PaisaUsers– DailyLocations
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MergingLocationsandViolence
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MobileSalariesIncreaseUsage
TAREK GHANI – WASHU OLIN
ViolenceBeliefsDecreaseTakeUp
TAREK GHANI – WASHU OLIN
2nd Project:Overview(2016)• “Mobile-izing Savings”inAfghanistan1. Createasimplephone-basedsavingsaccount,with
automaticpayrolldeduction2. Randomizeinitialcontributionlevelsfor949Roshan
stafftotestdoesdefaultenrollment increasesavings?3. Moreexperiments(textmsgs,financialconsultation)to
learnwhydoesdefaultenrollmentwork?
• Keyresults1. Defaultenrollmentisveryeffective:roughlyequalto
50%matchingincentivesforincreasingparticipation2. Presentbiasismechanismbehindthisdefaulteffect
TAREK GHANI – WASHU OLIN
Introducing“M-Pasandaz”:KeyFeatures• WorkingwithRoshan,wedevelopedamobilemoney-basedsavingsaccountcalled“M-Pasandaz”– Secondarymobilemoneyaccountwithbasicfunctionality(checkbalance,transferout)
– Automaticpayrolldeductionoption• Upto10%ofmonthlysalary• Auto-depositedtoM-Pasandaz onpayday• Matchingincentivesprovidedbyemployer
• Thefineprint• Withdrawalsarefreeandinstantaneous• Anywithdrawalforfeitsallincentives• Incentivespaidatendof6-month“trial”period• PayrolldeductionistheonlywaytodeposittoM-Pasandaz• Contributionratecanbechangedatanytime(takes2-3minutes)
TAREK GHANI – WASHU OLIN
ResearchDesign:PolicyExperiment
• Samplecross-randomizedintotreatments:1. Defaultenrollmentstatus
A. DefaultIn:5%ofsalaryauto-depositstoM-PasandazB. DefaultOut: 0%ofsalaryauto-depositstoM-Pasandaz
– Note:anyonecanchangerate,atanytime,bycallingHR
2. Matchingincentiveleveli. WhitePlan:Nomatchingincentivesprovidedii. BluePlan:25%matchonallcontributionsiii. RedPlan:50%matchonallcontributions
– Note:Employeescannotchangeplantype
TAREK GHANI – WASHU OLIN
Results:“Pricingthedefaulteffect”
• Defaultisroughlyequivalenttoa50%match
0.2
.4.6
.81
Parti
cipa
tes
(=1)
0 10 20 30 40 50Match Rate (%)
Default Out Default In+/− 2 se
Participates (=1)
®
TAREK GHANI – WASHU OLIN
ExperimentalDesign:ProjectTimeline
• Timeline• StudyPhase1:Defaultsandmatchingcontributions• StudyPhase2:Understandingwhydefaultwork
TAREK GHANI – WASHU OLIN
3rd Project:Overview(infield)
• GovernmentMobileSalaryPayments1. CivilservantspaidtodayusingamixofEFTandcash
systems– highlevelsofleakageanddissatisfaction2. Pilotwith3,000MinistryofLaboremployeesinKabul
launchesinJuly:measurecostsavings&experiences3. 250kteachers,100kothercivilservants,370kANDSF:
leveragescale&networkeffecttoattractprivateusers
• Keypoints1. Statesmustpaytheiremployeesinordertofunction2. Oncedemonstrated,potentialtobeapopularreform
TAREK GHANI – WASHU OLIN
Conclusions
• MobilesalariescanhelpcatalyzeMMadoptionbyofferingbenefitstoemployers,employeesandMNOs.– Preferenceforliquiditywithviolencerequiresrobustnetwork
• Withmobilesalaries,automaticpayrolldeductiongenerateslargeincreasesinshort-termsavings.– Makingsavingsa“passive”decisioniseffective(50%match)
• GovernmentofAfghanistanexploringmobilesalaries.– Morebroadly:digitizinggovernmentpaymentsandreceipts
TAREK GHANI – WASHU OLIN
ThanksforyourattentionFeedback,comments,suggestionswelcome!