Mobile money, a type of digital currency that enables secure storage and long-distance transfers at a low cost all managed via text message, has been a game-changer for people in the developing world without access to banking infrastructure. Research from Leeds faculty members David Drake and Gloria Urrea shows that the technology is effective, but its impact and feasibility start to break down as poverty increases, arguably in the situations where it is needed most.
“We wanted to understand how this business model was impacted by the pervasiveness of poverty in an area to test its fundamental purpose: to help those at the base of the pyramid,” said Drake, an assistant professor in the Department of Strategy, Entrepreneurship and Operations Management. “We found that the business model does very well up to a point. Demand for the service initially increases as the pervasiveness of poverty increases. This is what you hope to see in a base of the pyramid business model. However, we also found that as poverty becomes more extreme, the business model starts to collapse.”
Learn more about this research and its implications for poverty alleviation in this recent article from CU Boulder Today.
Drake and Urrea's paper study, “The Impact of Poverty on Base of the Pyramid Operations: Evidence from Mobile Money in Africa,” received CESR's 2023 Highest Impact Paper Award. Learn more about other high-impact ESG research from Leeds here.