Angelino Viceisza

MIT & Spelman College

 

 

With Eduardo Nakasone (Michigan State University) and Máximo Torero (Food and Agriculture Organization/FAO)

Abstract: Migrant remittances to low- and middle-income countries were close to 650 billion US dollars in 2022, impacting about one billion people worldwide. Despite this, sending remittances remains relatively costly. Policymakers have argued that fintech, specifically, comparison websites like kayak.com but for sending money, can boost financial inclusion and reduce remittance prices. Yet, little is known about how a key segment of consumers — migrants with limited (financial) education and trust in digital methods — interacts with fintech. We collaborate with a World Bank certified comparison website to conduct a field experiment among Central American migrants. We vary remittance-company attributes shown to migrants on a comparison website, specifically, the time to delivery and customer reviews, to assess the potential for fintech to impact their choices. We use visual attention data to assess the information-processing mechanisms that lead to such choices. Our findings are as follows. First, migrants are more likely to « experiment » with companies when shown prior customer reviews than delivery speed. Second, they respond to information as expected by choosing companies that are better reviewed and faster. Third, we cannot rule out that  experimentation is welfare-reducing: those with a preference for lower fees (or faster companies) end up choosing pricier (or slower) companies when shown more information. Finally, these effects are more pronounced for migrants with low financial literacy and no prior awareness of fintech. The findings paint a nuanced picture of the potential for fintech to improve financial inclusion and consumer welfare among this demographic.

– Séminaire organisé par le programme 3 / BSE –