Role of Mobile Money Use on Household Saving in Kenya: Evidence From 2021 Finaccess Survey

Abstract

There is global consensus on the significance of a thriving financial sector oriented towards poverty eradication and achievement of equitable economic growth. The financial sector is an intermediary between those who save and borrow, as it enables mobilization and allocation of financial resources for investment and wealth creation. Among programs pursued in Kenya’s vision 2030 is a vibrant and efficient financial sector that drives high levels of savings for financing the country’s investment needs. This study sought to investigate the role of mobile money use on saving by households in Kenya, and controlled for socioeconomic and demographic factors that included internet accessibility, education levels, age, location, livelihood categories, gender and shocks that a household may have experienced, using the 2021 National FinAccess household survey. The study modelled for saving formally and saving informally using a probit regression model. The findings revealed that although current use of mobile money was not significant in the choice to save formally, it was significant in the choice to save informally. Additionally, the use of mobile money decreased the probability of informal saving, more than it decreased the probability of saving formally. Further, our findings reveal that internet access, education, age, and gender were all significant factors in determining both formal and informal saving choices by households. The study recommends for interest earning on savings accumulated through mobile money, as this would provide an incentive for individuals to save more.