Promoting financial inclusion: do unconditional e-money transfers work?

Abstract

This research paper evaluates the impact of social assistance payments in the form of mobile money on financial inclusion. Through digital wallets, we exploit the disbursement of monetary support for vulnerable people in Colombia. Using a Regression Discontinuity Design (RDD) and administrative data on transactions, we test the effects of mobile money aid on transaction use, such as wire money transfers and cash-outs, and end-of-the-month balances. We find that (i) the program increased by 1.4 p.p. the average probability of using wire money transfers in the period analyzed. This represents an increase of 24% compared to the control group's average use of wire money transfers. (ii) The probability of cashing money out decreases by 76.6% when comparing the first semester to the fifth semester of continuous use. Finally, (iii) we find that eligible users increased their end-of-the-month balance by 27.6% compared to the non-eligible group's average end-of-the-month deposit account balance.