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Field
Abstract
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Before
How do markets reorganize endogenously when there is exogenous entry of new entrants? When and how does this influence consumer demand and trust? We study this in the context of markets for retail digital financial services (DFS) / mobile money in Ghana. As markets for DFS evolve, new actors will enter the business environment; thus, influencing market competition. How these markets will reorganize themselves under entry and competition is an important and first-order question, yet poorly understood. We ask, specifically — (i) what price and non-price dimensions do retail mobile money businesses compete on (Quality or Transparency or Management)?; (ii) what are the general equilibrium impacts of competition on incumbents and other businesses?; (iii) can retail DFS unlock the potential of existing small business retailers — by adding retail DF as another line of business?; (iv) when and how does the induced competition affect consumer demand and trust in DFS? To answer these questions, we partner with MTN Mobile Money (the largest MNO-led DF provider) and GCB Ltd’s G-Money (the largest Bank-led DF provider) to randomize the expansion of new retail mobile money vendors across low-income localities.
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After
How do markets reorganize endogenously when there is exogenous entry of new entrants? When and how does this influence consumer demand and trust? We study this in the context of markets for retail digital financial services (DFS) / mobile money in Ghana. As markets for DFS evolve, new actors will enter the business environment; thus, influencing market competition. How these markets will reorganize themselves under entry and competition is an important and first-order question, yet poorly understood. We ask, specifically — (i) what price and non-price dimensions do retail mobile money businesses compete on (Quality or Firm Conduct or Transparency or Location)?; (ii) what are the general equilibrium impacts of competition on incumbents and other businesses?; (iii) can retail DFS unlock the potential of existing small business retailers — by adding retail DF as another line of business?; (iv) when and how does the induced competition affect consumer demand and trust in DFS? To answer these questions, we partner with MTN Mobile Money (the largest MNO-led DF provider) and GCB Ltd’s G-Money (the largest Bank-led DF provider) to randomize the expansion of new retail mobile money vendors across low-income localities.
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Field
Primary Outcomes (End Points)
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Before
We successfully piloted our experiment (key protocols, instruments, proposed design, recruitment and enrollment processes) between January - June 2021.
Measurements:
*For (incumbent) market vendors, we plan to measure impacts on:
(i) Misconduct - Quality: prices charged for retail services; overcharging consumers or illegal markups (incidence and severity).
(ii) Transparency: whether price list posted, visible and clear; including whether vendor attempts to inform consumers about transaction tariffs before conducting transaction (verbal disclosure of price).
(iii) Reliability - Quality: whether vendor is present/absent at the retail outlet; whether transaction successful; likelihood of vendors’ declining transactions due to liquidity shortfalls or poor liquidity management; both transaction and service times.
(iv) Innovation: bundling M-Money with other non-M-Money services (or expansions to other lines of business); including total exits; changing vendor locations; hours of operations; vendor's accessibility to previously unbanked / unserved households.
(v) Service - Quality: consumers' views and experiences about safety, privacy, invasion, harassment, discrimination, and respect after visiting vendor points.
We will adapt Annan (2020, 2021) audit study protocols (and surveys) to measure vendor outcomes objectively (and subjectively respectively). We will combine the outcomes to derive an index of overall service quality.
*For consumers, we plan to examine the impacts on usage and trust outcomes.
(i) We will field questions that will provide subjective measures of trust in M-Money providers, market vendors, carrying out vendor-involved transactions on M-Money, consumers’ family and friends, commercial and rural banks, and the regulator of financial services in Ghana (Bank of Ghana) if they have heard enough about them to say.
(ii) We will supplement this with objective measures of trust measured from trust games between consumers and their local vendors. In its simple form: this entails a real monetary payoff game between the consumers (i.e., trustors) and one randomly selected (anonymous) local vendor (i.e., trustee). We impose vendor anonymity to mitigate against issues of social and individual preferences. Consumers will be endowed with 40GHS and will decide how much to send to another person (i.e., M-Money vendor). We will triple it, so that the vendor receives three times the amount of money the consumer sent. The vendor will then decide how much he/she wants to send back to the consumer. The total payoffs depend on the choices made between the consumers and vendor. Our objective measure of consumer trust will reflect the amount they sent and expected the vendor to send back to them.
*For (all market participants: vendors, consumers, nearby stores), we plan to measure their beliefs and expectations about potential competition effects if competition is introduced on: (i) misconduct / overcharging, (ii) reliability / illiquidity (transaction declines due to liquidity shortfalls), (iii) transparency / tariff posting behavior of vendors, (iv) location of vendor's retail store, (v) innovation / bundling of M-Money with other non-M-Money services at agent points, (vi) consumer trust, and (vii) consumer experiences and usage.
*We will combine baseline and endline (i) market census, (ii) surveys, (iii) field trust games, and (iv) audit studies to track vendor, customer, and business outcomes (including: revenues, profits, number of customers, business expenses, employment, wagebill, household expenses), supplemented with administrative data (on sales revenue, vendor entry / exit, consumers' usage) from the commercial providers to examine broader impacts, including persistence and entry of new vendors across the localities.
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After
We successfully piloted our experiment (key protocols, instruments, proposed design, recruitment and enrollment processes) between January - June 2021.
Measurements:
(1) Producer welfare-related:
*Business outcomes (including: revenues, profits, number of customers, business expenses, employment, wagebill, household expenses) from market census and surveys, supplemented with administrative data (on sales revenue, vendor entry / exit, consumers' usage) from the commercial providers to examine broader impacts, including persistence and entry of new vendors across the localities.
(2) Consumer welfare-related:
(i) Misconduct - Quality: prices charged for retail services; overcharging consumers or illegal markups (incidence and severity).
(ii) Transparency: whether price list posted, visible and clear; including whether vendor attempts to inform consumers about transaction tariffs before conducting transaction (verbal disclosure of price).
(iii) Reliability - Quality: whether vendor is present/absent at the retail outlet; whether transaction successful; likelihood of vendors’ declining transactions due to liquidity shortfalls or poor liquidity management; both transaction and service times.
(iv) Innovation: bundling M-Money with other non-M-Money services (or expansions to other lines of business); including total exits; changing vendor locations; hours of operations; vendor's accessibility to previously unbanked / unserved households.
(v) Service - Quality: consumers' views and experiences about safety, privacy, invasion, harassment, discrimination, and respect after visiting vendor points.
We will adapt Annan (2020, 2021) audit study protocols (and surveys) to measure vendor outcomes objectively (and subjectively respectively). We will combine the outcomes to derive an index of overall service quality.
*We also plan to examine the impacts on consumers' usage and trust outcomes.
(i) We will field questions that will provide subjective measures of trust in M-Money providers, market vendors, carrying out vendor-involved transactions on M-Money, consumers’ family and friends, commercial and rural banks, and the regulator of financial services in Ghana (Bank of Ghana) if they have heard enough about them to say.
(ii) We will supplement this with objective measures of trust measured from trust games between consumers and their local vendors. In its simple form: this entails a real monetary payoff game between the consumers (i.e., trustors) and one randomly selected (anonymous) local vendor (i.e., trustee). We impose vendor anonymity to mitigate against issues of social and individual preferences. Consumers will be endowed with 40GHS and will decide how much to send to another person (i.e., M-Money vendor). We will triple it, so that the vendor receives three times the amount of money the consumer sent. The vendor will then decide how much he/she wants to send back to the consumer. The total payoffs depend on the choices made between the consumers and vendor. Our objective measure of consumer trust will reflect the amount they sent and expected the vendor to send back to them.
(3) Beliefs and expectations:
*For (all market participants: vendors, consumers, nearby stores), we plan to measure their beliefs and expectations about potential entry/competition effects if entry/competition is introduced on: (i) misconduct / overcharging, (ii) reliability / illiquidity (transaction declines due to liquidity shortfalls), (iii) transparency / tariff posting behavior of vendors, (iv) location of vendor's retail store, (v) innovation / bundling of M-Money with other non-M-Money services at agent points, (vi) consumer trust, and (vii) consumer experiences and usage.
*We will compare baseline expectations with observed effects.
(4) Heterogeneity:
*4 major dimensions (heterogenous TEs):
(i) baseline ex-ante vendor and consumer predictions about endline ex-post effects of entry (measure selection effects).
(ii) baseline no. of- + size of- incumbents x population (market strata).
(iii) geo-distance x competition (or x cooperation).
(iv) geo-distance x competition (or x unrelated test).
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Field
Additional Keyword(s)
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Before
Mobile Money, Competition, Service Quality, Consumer Protection, Supply-side Interventions, Microenterprises
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After
Mobile Money, Competition, Consumer Protection, Supply-side Interventions, Microenterprises, Direct Effects, Indirect Effects
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