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Violence and financial decisions: evidence from mobile money in Afghanistan

Callen, Mike, Blumenstock, Joshua E. and Ghani, Tarek (2014) Violence and financial decisions: evidence from mobile money in Afghanistan. .

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Abstract

We examine the relationship between violence and financial decisions in Afghanistan. Using three separate data sources, we find that individuals experiencing violence retain more cash and are less likely to adopt and use mobile money, a new financial technology. We first combine detailed information on the entire universe of mobile money transactions in Afghanistan with administrative records for all violent incidents recorded by international forces, and find a negative relationship between violence and mobile money use. Second, in the context of a randomized control trial, violence is associated with decreased mobile money use and greater cash balances. Third, in financial survey data from nineteen of Afghanistan’s 34 provinces, we find that individuals experiencing violence hold more cash. Collectively, the evidence indicates that individuals experiencing violence prefer cash to mobile money. More speculatively, it appears that this is principally because of concerns about future violence. The degree of the relationship between cash holdings and violence is large enough to suggest that robust formal financial networks face severe challenges developing in conflict environments.

Item Type: Monograph (Working Paper)
Additional Information: © 2014 The Authors
Divisions: Economics
Subjects: H Social Sciences > HG Finance
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
Date Deposited: 10 Jan 2020 15:21
Last Modified: 03 Aug 2020 23:04
URI: http://eprints.lse.ac.uk/id/eprint/103036

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