Micro Deposits and Their Macroeconomic Impact

Roberto Rigobon’s research examines the potential macroeconomic impact of M-PESA, the mobile banking service that has spread rapidly across Kenya. It is possible that Kenya could be witnessing the creation and development of a new financial system through M-PESA, which is owned by a cell phone company.

Rigobon analyzes the potential effects of this still young technology and studies the macroeconomic implications of the two possible avenues M-PESA could grow into. First, M-PESA might develop into a “pure payment” system, similar to PayPal, and used exclusively to transfer money from one party to another. Second, the technology might develop into a more comprehensive financial intermediary, offering the types of services and products normally available from banks.

Each of these two possible directions carries unique macroeconomic implications; Rigobon’s aim is to analyze these implications and look at the design of the relative regulatory systems with a concentration on examining what would make them as safe as possible. 

Research Questions: 
  • What are the macroeconomic implications of M-PESA developing into a pure payment system (like PayPal)?
  • What are the macroeconomic implications of M-PESA developing into a financial intermediary, with more traditional services and products?
  • What regulatory framework might best suit each of these two potential outcomes?
  • What is the impact of hidden costs in the M-PESA system?

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