nep-dev New Economics Papers
on Development
Issue of 2021‒06‒14
eighteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Let’s Take the Con Out of Randomized Control Trials in Development: The Puzzles and Paradoxes of External Validity, Empirically Illustrated By Lant Pritchett
  2. Coastal Proximity and Individual Living Standards: Econometric Evidence from Geo-Referenced Household Surveys By Frederik Wild; David Stadelmann
  3. The Relative Importance of Female Education on Fertility Desires in Sub-Saharan Africa: A Multi-Level Analysis By Endale Kebede
  4. ‘Rule-of-Thumb’ Instructions to Improve Fertilizer Management: Experimental Evidence from Bangladesh By Islam, Mahnaz; Beg, Sabrin
  5. Latin America's Income Inequality Under five Political Regimes, 1870-2018 By Giovanni Andrea Cornia
  6. The Role of the Diaspora in the Internationalization of the Colombian Economy By Ana Grisanti; Daniela Muhaj; Eric S. M. Protzer; Jessie Lu; Julian Hinz; Ljubica Nedelkoska; Matte Hartog; Ricardo Hausmann; Andre Assumpcao; Annalee Saxenian
  7. Standing in the Way of Rigor? Economics’ Meeting with the Decolonizing Agenda By Ingrid Harvold Kvangraven; Surbhi Kesar
  8. The role of space and time in the interaction of farmers' management decisions and bee communities: Evidence from South India By Steinhübel, Linda; Wenzel, Arne; Hulamani, Prashant; von Cramon-Taubadel, Stephan; Mason, Nicole M.
  9. International Trade and Labor Markets: Evidence from the Arab Republic of Egypt By Robertson, Raymond; Vergara Bahena, Mexico Alberto; Kokas, Deeksha; Lopez-Acevedo, Gladys
  10. Digitization and Development: Formalizing Property Rights and its Impact on Land and Labor Allocation By beg, Sabrin
  11. Effect of extreme weather events on child health in rural Uganda By Injete Amondo, Emily; Mirzabaev, Alisher; Nshakira-Rukundo, Emmanuel
  12. Mobile phone coverage and violent conflict By Klaus Ackermann; Sefa Awaworyi Churchill; Russell Smyth
  13. Barriers to Growth-Enhancing Structural Transformation: The Role of Subnational Differences in Intersectoral Productivity Gaps By Paul, Saumik; Raju, Dhushyanth
  14. Intrahousehold Resource Allocation and Individual Poverty: Assessing Collective Model Predictions against Direct Evidence on Sharing By Bargain, Olivier; Lacroix, Guy; Tiberti, Luca
  15. Input use and output price risks: the case of maize in Burkina Faso By Le Cotty, Tristan; Maître d'Hôtel, Elodie; Ndiaye, Moctar; Thoyer, Sophie
  16. Evaluating the Impact of Remittances on Human Capital Investment in the Kyrgyz Republic By Gao, Xin; Kikkawa, Aiko; Kang, Jong Woo
  17. Children in left-behind migrant households: education and gender equality By Saleemi, Sundus
  18. Influence of attitude on mobile banking acceptance and factors determining attitude of end-users in Ethiopia By Kejela, A. B.; Porath, Daniel

  1. By: Lant Pritchett (Center for International Development at Harvard University)
    Abstract: The enthusiasm for the potential of RCTs in development rests in part on the assumption that the use of the rigorous evidence that emerges from an RCT (or from a small set of studies identified as rigorous in a “systematic” review) leads to the adoption of more effective policies, programs or projects. However, the supposed benefits of using rigorous evidence for “evidence based” policy making depend critically on the extent to which there is external validity. If estimates of causal impact or treatment effects that have internal validity (are unbiased) in one context (where the relevant “context” could be country, region, implementing organization, complementary policies, initial conditions, etc.) cannot be applied to another context then applying evidence that is rigorous in one context may actually reduce predictive accuracy in other contexts relative to simple evidence from that context—even if that evidence is biased (Pritchett and Sandefur 2015). Using empirical estimates from a large number of developing countries of the difference in student learning in public and private schools (just as one potential policy application) I show that commonly made assumptions about external validity are, in the face of the actual observed heterogeneity across contexts, both logically incoherent and empirically unhelpful. Logically incoherent, in that it is impossible to reconcile general claims about external validity of rigorous estimates of causal impact and the heterogeneity of the raw facts about differentials. Empirically unhelpful in that using a single (or small set) of rigorous estimates to apply to all other actually leads to a larger root mean square error of prediction of the “true” causal impact across contexts than just using the estimates from non-experimental data from each country. In the data about private and public schools, under plausible assumptions, an exclusive reliance on the rigorous evidence has RMSE three times worse than using the biased OLS result from each context. In making policy decisions one needs to rely on an understanding of the relevant phenomena that encompasses all of the available evidence.
    Keywords: randomized controlled trials
    Date: 2021–05
  2. By: Frederik Wild; David Stadelmann
    Abstract: We investigate geo-referenced household-level data consisting of up to 206,896 individuals living in 21,826 localities across 28 sub-Saharan African countries over 20 years. We analyse the relevance of coastal proximity as a predictor of individual economic living standards. Our setting allows us to account for country-time fixed effects as well as individual-specific controls such as age, gender, and most importantly, urbanity. Results reveal that individuals living further away from the coast are more disadvantaged than individuals living in coastal regions along an array of welfare indicators. The findings are robust to the inclusion of other geographic covariates of development such as climate (e.g. temperature, precipitation), elevation or terrain ruggedness. We also explore mechanisms through which coastal proximity may influence individual welfare and decompose the estimated effect of coastal proximity via formal mediation analysis. Our results highlight the role of human capital as well as infrastructural endowments in reconciling the large intra-national disparities in individual economic welfare.
    Keywords: Geography; Coastal Proximity; Sub-Saharan Africa; Mediation Analysis
    JEL: O15 O18 R12 O55
    Date: 2021–06
  3. By: Endale Kebede
    Abstract: Scholars suggest that in high fertility settings where there is high wanted fertility, lowering the desired family size is a necessary precondition for fertility declines. Though accumulated evidence has linked socio-economic developments to changes in fertility desires, little efforts have taken to disentangle the relative importance of key socio- economic determinants such as education, income, and area of residence in a multi-level context. Combining individual and community-level data from Demographic and Health Surveys of 34 African countries to aggregate level indicators, we have quantified and compared the relative role of female education on fertility desire at the individual, community, and country levels. Results show that at the individual level, female education has a stronger effect compared to household wealth, and area of residence. The high levels of reported desired family size in the rural parts of SSA are mainly a consequence of their relatively lower levels of educational attainment compared to their urban counterparts. At the community level, the relative impact of female education is even more striking. The simulation results revealed that moving the most economically disadvantaged and illiterate woman from a low educated to a high-educated community would reduce her desired family size by about 20 percent. On the other hand, lifting the same woman from the poorest to the wealthiest community would reduce her family size desire only by 6 percent. Our findings are robust to alternative measures of fertility preferences. This study, thus, confirmed the findings of previous studies that have looked at the relationship and causal link between actual fertility and women’s level of educational attainment.
    Keywords: Desired fertility, sub-Saharan Africa, female education, multi-level analysis, community education
    Date: 2019–12
  4. By: Islam, Mahnaz; Beg, Sabrin
    Abstract: Heavy government subsidies have led to inefficient application and overuse of fertilizer in Bangladesh. This results in higher than optimal costs to farmers and environmental and public costs. In a randomized controlled trial, we provide farmers with a simple tool (leaf color chart) and basic `rule-of-thumb' instructions to guide the timing and quantity of urea (nitrogen) application. Treatment farmers reduce urea use by 8\% without compromising yield, suggesting significant scope for improving urea management. The results are mainly driven by farmers delaying urea application as returns to urea are low early on in the season and urea applied is likely to be wasted. Cost-effectiveness estimates suggest that each dollar spent on this intervention produces a return of \$2.8 dollars due to reduction of urea use over three seasons, as well as significant environmental benefits. We also find suggestive evidence that optimizing the timing of urea application affects farmers' yields, plausibly as the intervention allows farmers to reallocate urea application to times when returns to urea are highest.
    Keywords: Technology Adoption, Farm Management, Environmental Economics, Resource Management
    JEL: H50 O12 O13
    Date: 2020–01–19
  5. By: Giovanni Andrea Cornia
    Abstract: Most analysts of the Latin American economy believe in the unavoidable persistence of high income and wealth inequality in the region due to a continued structural dependence on primary commodities, the lingering effects of colonial policies, and the emergence of a modernized version of the traditional elites. This paper challenges this view on political economic grounds. It argues that the changes observed over the last one hundred and fifty years in the political orientation of governments affected the nature of economic and social policies that, in their turn, influenced the level of income inequality, both upward and downward. In other words, the evolution of inequality has depended to a considerable extent on ideological and political changes that need to be fully understood. This paper tries to explore this circular relation between `political orientation' of governments and `inequality', and between ‘endogenous changes in economic/social conditions' and `changes in the political orientation of governments'.
    Date: 2021
  6. By: Ana Grisanti (Center for International Development at Harvard University); Daniela Muhaj; Eric S. M. Protzer (Center for Global Development); Jessie Lu; Julian Hinz; Ljubica Nedelkoska (Center for International Development at Harvard University); Matte Hartog (Center for International Development at Harvard University); Ricardo Hausmann (Center for International Development at Harvard University); Andre Assumpcao (Center for International Development at Harvard University); Annalee Saxenian
    Abstract: We studied the geography as well as the demographic and soco-economic characteristics of 1.7 million members of the global Colombian diaspora (34% of the total estimated Colombian diaspora) using census and survey data from major host countries, and 3.5 million Twitter users located around the world presumed to be of Colombian origin. We also studied the locations and industries of Colombian senior managers and directors outside Colombia, using a global database of over 400 million companies. Moreover, we studied the migration journeys, the diaspora’s attachment to Colombia, the level of diaspora engagement and interest in engaging, the intentions to return back home, the interest in diaspora government policy, and the overall sentiment of the diaspora towards Colombia, through a survey which received 11,500 responses from the diaspora in well over 100 countries in less than two months. We additionally interviewed 12 Colombian transnational entrepreneurs and professionals, to understand what attracts them professionally to Colombia, and what may stand in the way of more diaspora engagement and professional growth.
    Keywords: Diaspora, Colombia
    Date: 2021–05
  7. By: Ingrid Harvold Kvangraven (University of York, UK); Surbhi Kesar (Azim Premji University, India)
    Abstract: This paper critically engages with various aspects of the decolonization movement in economics and its implications for the discipline. We operationalize the insights from this engagement using a survey of 498 economists that explores how faculty across different kinds of departments, disciplines, geographies, and identities perceive the problems of economics teaching, how they think economics pedagogy should be reformed, if at all, and how they relate to decolonial critiques of economics pedagogy. Based on the survey findings, we conclude that the mainstream of the field’s emphasis on technical training and rigor, within a narrow theoretical and methodological framework, likely stands in the way of the very possibility for decolonizing economics, given its strong contrast to key ideas associated with the decolonization agenda, such as positionality, centering power relations, exposing underlying politics of defining theoretical categories, and unpacking the politics of knowledge production. Nonetheless, the survey responses clearly chart out the challenges that the field faces in terms of decolonizing pedagogy, which is a first step towards debate and change.
    Keywords: Economics teaching, economics pedagogy, decolonial theory, postcolonial theory, decolonizing economics
    JEL: A20 B40 B50 F54
    Date: 2021–05
  8. By: Steinhübel, Linda; Wenzel, Arne; Hulamani, Prashant; von Cramon-Taubadel, Stephan; Mason, Nicole M.
    Abstract: CONTEXT Agricultural management systems of many smallholders in low and middle-income countries depend on services by pollinator populations. However, increased adoption of modern inputs and particularly the wide-spread use of agrochemicals threaten pollinators and smallholders' crop production. Understanding how farmers' use of modern inputs affects pollinator communities is, therefore, crucial for development efforts and the design and promotion of sustainable agricultural practices. OBJECTIVE We contribute to the still scarce literature on pollinator communities in low and middle-income countries by analyzing the link between the use of agrochemicals and wild bee populations in South India. Moreover, we capture temporal and spatial scaling in farm-pollinator relationships by explicitly analyzing effects of present, past, and neighboring agricultural management decisions on wild bee populations. METHODS Our empirical analysis is based on an interdisciplinary data set, combining information from pan trap experiments and a socio-economic survey of 127 agricultural plots in the rural-urban interface of Bangalore, India. We implemented a Poisson generalized linear model (GLM) to analyze factors influencing bee abundance and richness with a particular focus on the effects of farmers' management decisions. Present and past management were measured by the use of chemical fertilizers, pesticides, and irrigation in 2018 and during the previous years respectively. By setting up spatial weight matrices, we derived a proxy for neighboring management decisions and were able to estimate potential spillover effects. RESULTS AND CONCLUSION Our results suggest that agricultural intensification is associated with a decline of bee abundance and richness in our study area. Both time and space play important roles in explaining farm-bee interactions. We find statistically significant negative spillovers of pesticide use. With every addition percent of neighboring farmers using pesticides, bee abundance and richness decrease by up to 0.68 percent on the focal plot. Furthermore, smallholders' decisions to use chemical fertilizers and pesticides on their own plots significantly decrease the number of observed bees by about 20 percent. Also, every additional year of intensive past management reduces both bee abundance and richness by up to 8 percent. SIGNIFICANCE We provide new empirical evidence on farm-pollinator relationships in tropical low and middleincome countries. Based on our results, cooperative behavior among farmers and/or the regulation of agrochemical use seem to be crucial to moderate spatial spillovers of agricultural decision-making. Also, a rotation of extensive and intensive management seems to be an appropriate way to mitigate negative effects of agricultural intensification on bee populations.
    Keywords: Bee communities,India,pesticides,spillovers,temporal and spatial scales
    Date: 2021
  9. By: Robertson, Raymond (Texas A&M University); Vergara Bahena, Mexico Alberto (World Bank); Kokas, Deeksha (World Bank); Lopez-Acevedo, Gladys (World Bank)
    Abstract: Since the early 1990s, some developing countries have experienced a coincidence of rising exports – especially those related to global value chains – and improved labor market outcomes. During 2000–10, rising trade was associated with falling poverty and inequality in many developing countries. However, the Arab Republic of Egypt was not one of these countries, although it signed several trade agreements. The lack of trade-related improvements in labor market outcomes – including poverty, inequality, average wage levels, informality, and female labor force participation – could be explained by at least two possibilities. First, it is possible that trade agreements did not produce the same increase in trade for Egypt as for other countries. Second, it is possible that exports do not generate the same kinds of changes in labor market outcomes as experienced in other countries. After presenting the trends in key labor market outcomes over 2000–19, this paper evaluates both hypotheses. Using a gravity model approach, the results suggest that the changes in Egypt's exports following trade agreements are above internationally estimated averages. Second, the results from a Bartik approach find no significant relationship between rising exports and wages, informality, or female labor force participation. Additional analysis shows that Egypt's average wage levels are among the highest among countries that export the same goods exported by Egypt, possibly suggesting that Egypt has a relatively weak comparative advantage in currently exported goods, and thus might need to rethink its export basket.
    Keywords: labor market outcomes, trade agreements, Egypt
    JEL: J31 F16
    Date: 2021–06
  10. By: beg, Sabrin
    Abstract: I test the land and labor market effects of a property rights reform that computerized rural land records in Pakistan, making digitized records and automated transactions accessible to agricultural landowners and cultivators. Using the staggered roll-out of the program, I find that while the reform does not shift land ownership, landowning households are more likely to rent out land and shift into non-agricultural occupations. At the same time, cultivating households have access to more land, as rented in land and overall farm size increase. I construct measures of farmer-level TFP and marginal product of land, and demonstrate evidence of improved allocative efficiency as land is redistributed towards more productive farmers. Aggregate district-level production data suggest a reduction in the dispersion of marginal products of land and an improvement in productivity. The results have implications for both the allocation of land across farmers and the selection of labor into farming, demonstrating that agricultural land market frictions present a constraint to scale farming and structural change in developing countries.
    Keywords: Property Rights, Rural Mobility, Agricultural Land Markets, ICT in Development, Institutions, Misallocation
    JEL: O1 O10 O12 O13
    Date: 2021–01–29
  11. By: Injete Amondo, Emily; Mirzabaev, Alisher; Nshakira-Rukundo, Emmanuel
    Abstract: Children in rural farming households across the developing countries are often vulnerable to a multitude of risks, including health risks associated with climate change and variability. This study empirically traced the effect of extreme weather events on nutritional health outcomes among rural children in Uganda, while accounting for households’ behavioural responses. We combined four waves of the Uganda National Panel Survey (UNPS) for the period 2009-2014, with long-term rainfall and temperature datasets and study the effect of extreme weather shocks on child health. We find that droughts and heat waves worsened child anthropometrics, particularly child chronic undernutrition. Exposure to drought significantly lowered height-for-age scores (HAZ) of up to -0.57 standard deviations. The main causal transmission channels were through lower crop production and increased frequency of child diseases. We highlight on the importance of ex-ante resilience building against extreme weather events particularly when compared to ex-post relief actions.
    Keywords: Health Economics and Policy, Labor and Human Capital
    Date: 2021–06–02
  12. By: Klaus Ackermann (SoDa Labs and Department of Econometrics and Business Statistics, Monash Business School, Monash University); Sefa Awaworyi Churchill (School of Economics, Finance & Marketing, RMIT University); Russell Smyth (Department of Economics, Monash Business School, Monash University)
    Abstract: We examine the effects of mobile phone coverage on violent conflicts in Africa using a new monthly panel dataset on mobile phone coverage at 55 55 km grid cell levels for 32 African countries covering the period from 2008 to 2018. The base rate of a conflict event in a month across our data set is 0.0039 with a standard deviation of 0.0620. We find that access to mobile phone coverage increases the probability of a conflict occurring in the next month by 0.0028. This finding is robust to a suite of sensitivity checks including the use of various specifications and alternative datasets. We examine heterogeneity on the impact of mobile phone coverage across state-based conflict, non-state-based conflict and one-sided conflict, and find that our results are being driven by non-state conflicts. We examine economic growth as a channel through which mobile phone coverage influences conflict. In doing so, we construct new satellite data for night-time light activity as a proxy for economic growth. We find that economic activity is a channel through which mobile phone coverage influences conflicts, and that higher economic growth weakens the positive effect of mobile phone coverage on conflict.
    Keywords: Mobile phones , Cell phone coverage, Violence, Conflict, Africa
    JEL: D74 C23 O13 Q34
    Date: 2021–05
  13. By: Paul, Saumik (Newcastle University); Raju, Dhushyanth (World Bank)
    Abstract: The movement of workers from the farm sector to a more productive nonfarm sector has failed to generate significant gains in labor productivity in recent decades in many developing countries. This paper offers a new perspective into the barriers to growth-enhancing structural transformation, combining structural modeling with enterprise census data from Ghana. We argue that subnational differences in the intersectoral productivity gap between the nonfarm informal and formal sectors constrain the productivity gain from structural transformation. In Ghana, intersectoral productivity gaps among the richer regions are on average three times larger than among the poorer regions. We model the disparity in regional intersectoral productivity gaps as reflecting the disparity in the regional misallocation of labor between the informal and formal sectors and identify misallocation as the output wedge between the informal and formal sectors. Simulations suggest that a more productive nonfarm informal sector reduces the disparity in regional intersectoral productivity gaps and, in turn, increases national productivity and the contribution of structural transformation to national productivity. For example, a 90-percent reduction in the disparity in regional intersectoral productivity gaps raises Ghana's national aggregate productivity by 11.9 percent and the contribution of structural transformation to productivity by 19.7 percent.
    Keywords: structural transformation, misallocation of resources, labor productivity, nonfarm enterprises, subnational regions, informal and formal sectors, Ghana
    JEL: D24 F15 F43 N10 O11 O14 O47
    Date: 2021–06
  14. By: Bargain, Olivier (University of Aix-Marseille II); Lacroix, Guy (Université Laval); Tiberti, Luca (Partnership for Economic Policy (pep))
    Abstract: Welfare analyses conducted by policy practitioners around the world usually rely on equivalized or per-capita expenditures and ignore the extent of within-household inequality. Recent advances in the estimation of collective models suggest ways to retrieve the complete sharing process within families using homogeneity assumptions (typically preferences stability upon exclusive goods across individuals or household types) and the observation of exclusive goods. So far, the prediction of these models has not been validated, essentially because intrahousehold allocation is seldom observed. We provide such a validation by leveraging a unique dataset from Bangladesh, which contains information on the fully individualized expenditures of each family member. We also test the core assumption (efficiency) and homogeneity assumptions used for identification. It turns out that the collective model predicts individual resources reasonably well when using clothing, i.e., one of the rare goods commonly assignable to male, female and children in standard expenditure surveys. It also allows identifying poor individuals in non-poor households while the traditional approach understates poverty among the poorest individuals.
    Keywords: collective model, Engel Curves, Rothbarth Method, sharing rule
    JEL: D11 D12 I31 J12
    Date: 2021–06
  15. By: Le Cotty, Tristan; Maître d'Hôtel, Elodie; Ndiaye, Moctar; Thoyer, Sophie
    Abstract: We investigate whether the fluctuations of agricultural output prices may explain the low level of input use in Sub-Saharan Africa. We combine data on local maize prices and data on farmers' fertilizer use over the 2009-2011 period in Burkina-Faso to estimate a panel-tobit model of fertilizer use. We separate the predictable and unpredictable components of maize price fluctuations and find that fertilizer use decreases when maize price fluctuations increase, and more specifically when unpredictable price fluctuations increase.
    Keywords: Agricultural and Food Policy, Farm Management
    Date: 2021–06–08
  16. By: Gao, Xin (Cornell University); Kikkawa, Aiko (Asian Development Bank); Kang, Jong Woo (Asian Development Bank)
    Abstract: Remittances from overseas can encourage human capital investment and improve educational outcomes in developing countries. Empirical studies, however, have shown mixed evidence at best. This paper uses a 5-year panel dataset that tracks the same 3,000 households and 8,000 individuals through time in all seven regions of the Kyrgyz Republic to examine the impact of remittances on the human capital formation of school-age children. After correcting for selection bias and other potential endogeneities with instrumental variables and fixed effects regressions, remittances are found to have negative impacts on human capital investment and educational achievement. The negative effects can be attributed in part to recipients’ increased expenditure on durable goods and extended hours of child labor on farm work as a compensation for missing adult labor. Our finding calls for actions that mitigate the negative effects and incentivize families to spend remittances on education, including financial literacy education, better monitoring of farm labor hours of school-age children, and targeted investment to improve the quality of education services in the Kyrgyz Republic.
    Keywords: education; household expenditure; human capital investment; Kyrgyz Republic; labor migration; remittances
    JEL: D13 F22 F24 O15
    Date: 2021–05–25
  17. By: Saleemi, Sundus
    Abstract: This paper analyses the effect of migration of men from rural areas in Pakistan on children in households “left behind” by the migrants. Left-behind households’ expenditure on children’s education and the gendered distribution of these expenditures are two outcomes of main interest. First, it is tested if left-behind households have higher overall expenditures on children’s education. Second, it is tested if migration of men from households reduces gender inequality in households’ expenditures on children’s education. This gendered distribution is analyzed by estimating the effect of migration on the share of households’ education expenditures spent on girls. Migration can affect these expenditures and its gendered distribution through various channels. Men’s migration may lead to women taking over household decisions regarding education expenditures. Migration may also transfer norms and alter peoples’ preferences such as those regarding children’s schooling. To differentiate between the channels two types of migration, permanent migration of men for employment creating “left-behind” households and temporary migration whereby male members migrate for employment for short periods during the year, have been considered. Transfer of norms is expected to operate through temporary migration episodes as well as via permanent migration, while the changes in women’s decision making is expected to operate via permanent migration when the men are absent. The effect of remittances has been further separated from the effect of migration. The paper uses longitudinal data from rural households in Pakistan with additional data collected from a sub-sample of the panel by the author. Fixed effects fixed effects model (FEM) is used to estimate these relationships, reducing endogeneity of migration. The results suggest that migrant and non-migrant households in the sample do not have significantly different expenditures on children’s schooling and education. This is true for both types of migration. Households that receive remittances have higher expenditures on children’s education. A noteworthy result is that left-behind households have girls’ shares that are higher as much as 18 percent than the average. This is not the case for households with temporary migrants, suggesting that women’s decision participation decreases gender inequality in households’ education expenditures. Heckman Selection Model has additionally been estimated to estimate the effect of the migration on households’ expenditure on girls’ education, considering the selection of households into sending girls to school. Heckman Selection model also suggests that left-behind households have higher per girl expenditures. The results of the selection model suggest that being a left-behind household is significantly positively associated with households’ expenditures on girls’ education.
    Keywords: Community/Rural/Urban Development, Consumer/Household Economics, Institutional and Behavioral Economics, Labor and Human Capital
    Date: 2021–05–31
  18. By: Kejela, A. B.; Porath, Daniel
    Abstract: As observed in many countries, mobile banking can revolutionize the practice of payment transactions. This is especially true for developing countries, where mobile banking has the potential to open non-cash banking services to the unbanked. However, unlike in countries like Kenya and Ghana, in Ethiopia, people still seem to be reluctant to use mobile banking, despite existing platforms availed by Ethiopian commercial banks like Dashen Bank and United Bank. In this paper, we explore the reasons for such reluctance with the help of the technology acceptance model (TAM) and modifications proposed by the literature that are particularly adequate for developing countries and mobile banking: the theory of trying (TT) and the concept of attitude strengths. In our sample of 394 mobile banking subscribers of Dashen Bank and United Bank, we find that a person's attitude is key for the acceptance of mobile banking and that attitude can be best explained by combining the elements of TT with the TAM. As a consequence, to foster mobile banking in Ethiopia, banks are advised to improve potential users' attitude, especially, taking into account the users' learning process and the systems' ease of use.
    Keywords: Mobile banking,Technology acceptance model,User acceptance,Theory of trying,Attitude strength,Ethiopia,Structural equation model
    Date: 2021

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