Effects of mobile money transactions on private savings ratio in Kenya from 2007 to 2017

A Research project Submitted in partial fulfillment of the requirements for the degree of Bachelor of Business Science in Financial Economics at Strathmore UniversityMobile money has received a lot of attention since the successful introduction of Mpesa in Kenya in 2007. Many economies in Africa have adopted the technology and it has evidently altered the lives and behaviors of those who use it and subsequently, respective economies. This has been attributed to the ease of access of financial services through the technology. Private savings, one of the variables that the innovation has directly and indirectly affected, is a key financial and economic aspect for micro and macroeconomic stabilization in developing countries. Despite this, recent findings have shown that savings in Kenya have perpetually been on the decline as compared to other regions. Most studies have approached the topic of mobile money and savings on a financial inclusion to the previously unbanked basis but have failed to take account of post-adoption saving responses of users of the technology, which this study aims to consider in a macroeconomic perspective. This study uses co-integration analysis to identify the long run relationship between mobile money transactions and private savings relative to GDP in Kenya from 2007 to 2017. The findings of this study are presence of a long run relationship but the nature of the relationship being inconclusive. This implies that the technology may have affected private savings ratio positively due to the increased financial inclusion but may have also had a negative effect due to the increase of fast access of financial services due to the technology