Can Mobile Money Reduce Household Poverty in Benin?

Abstract

The use of mobile money services appears to be an important means of improving household living conditions. This paper assesses the impact of mobile money on households’ poverty in Benin, using FinScope Benin data, 2018. The data involve 6415 households both in urban and rural area. A linear probability model with an instrumental variable (LPM-IV) is adopted to control for endogeneity bias due to a bi-causal relationship between mobile money and poverty. An extended probit regression model was also used for robustness check. The results robustly revealed that the use of mobile money has a positive impact on household poverty reduction through improving financial inclusion for financially excluded population and increasing households’ abilities to cope with shocks. The impact of mobile money on household poverty appears not to affect vulnerable groups in the same way. Indeed, the use of mobile money favors household in urban area compared to those in rural area. However, women, non-educated and employed, benefited less compared to men, educated and unemployed. Overall, these findings have important policy implications. Policy interventions should help household gain access to mobile money services to reduce poverty.