Mobile financial services and household welfare in a developing economy: boon and bane

Abstract

Purpose: This study aims to investigate whether the introduction of innovative financial products increases welfare for low-income households working in the manufacturing sector. Specifically, the authors measure the impact of mobile financial services (MFSs) on economic opportunities and wellbeing of garment factory workers in Bangladesh. Design/methodology/approach: The study is based on Amartya Sen’s Capabilities Approach. Close to 400 textile factory workers were interviewed about their experience using Bangladesh’s most popular MFS, and how their household welfare has changed over time. Results were tabulated and analyzed with simple statistical tools. Findings: While there remains an abundance of friction in the system, financial innovation still assisted low-income households in savings, and expedited and secured their fund transfers. The introduction of the new technology, especially when it is made mandatory, seems to have disempowered married women by reducing their financial independence from their husbands. Originality/value: This study should help policy makers and international bodies in their efforts to design and support the inclusive growth of mobile financial technology.