Development of Financial Services for the Poor in Guatemala

Last registered on September 28, 2016
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Pre-Trial

Trial Information

General Information

Title
Development of Financial Services for the Poor in Guatemala
RCT ID
AEARCTR-0001344
Initial registration date
September 28, 2016

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
September 28, 2016, 6:40 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Guatemala
Region
Latin American & Caribbean

Primary Investigator

Name
Craig McIntosh
Affiliation
IRPS/UCSD
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Other Primary Investigator(s)

PI Name
Elisabeth Sadoulet
PI Affiliation
University of California, Berkeley
Contact Investigator
PI Name
Jesse Atkinson
PI Affiliation
University of California, Berkeley
Contact Investigator
PI Name
Alain Janvry
PI Affiliation
University of California, Berkeley
Contact Investigator

Additional Trial Information

Status
Completed
Start date
2008-07-15
End date
2009-03-31
Keywords
Finance & Microfinance
Additional Keywords
Savings, behavior
JEL code(s)
Secondary IDs
Abstract
Can microfinance borrowers use the discipline of regular loan repayments in order to accumulate savings if prompted to do so? In an experiment, we offered commercial savings products to the microfinance borrowers of Guatemala’s largest public-sector bank. We find that giving these borrowers the opportunity to develop a saving plan and be reminded of saving at the time of loan repayment caused no increase in the opening of savings accounts but led to balances among savers that were two and a half times those in the control. A second treatment arm that proposed a default savings contribution of 10% of the loan payment caused the fraction of clients using linked savings accounts to double as well as elevating deposits among savers, leading to final savings balances that were more than five times the control. The savings treatments also generate faster pay-down of debt and weakly better overall repayment performance, suggesting that simultaneous savings and borrowing can be complementary activities. A theoretical model shows that the simultaneous provision of debt and self-commitment savings products can also help a greater fraction of the population to eventually escape a debt-financed equilibrium.
External Link(s)
J-PAL Evaluation Summary

Registration Citation

Citation
Atkinson, Jesse et al. 2016. "Development of Financial Services for the Poor in Guatemala." AEA RCT Registry. September 28. https://doi.org/10.1257/rct.1344-1.0
Former Citation
Atkinson, Jesse et al. 2016. "Development of Financial Services for the Poor in Guatemala." AEA RCT Registry. September 28. https://www.socialscienceregistry.org/trials/1344/history/10881
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Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2008-07-15
Intervention End Date
2009-03-31

Primary Outcomes

Primary Outcomes (end points)
Total Number of Deposits

Number of Deposits during Loan Term

Number of Withdrawals during Loan Term

Has Made at Least One Deposit after Loan Closes (for Closed Loans Only)

Net Accumulated Savings (US$)

Renewal of Loan After Closure

Average Amount of Outstanding Loan (% of Loan Amount)

Average Savings Balance in Percentage of Loan Amount (Savers Only)

Potential Lending from Savings Balance ($ of Loan Amount)

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
This experiment introduced a new set of microfinance products based on planning and reminders to help microfinance borrowers build their savings. In collaboration with Guatemala's largest public-sector bank, Credito Hipotecario Nacional (CHN), researchers randomized the deployment of new behaviorally motivated financial products across the bank's entire microfinance clientele. Three financial products were randomized across the 20 microfinance branches of CHN. All clients who applied for a microfinance loan were offered one of the three microfinance products, depending on which product their bank branch had been assigned. Clients who were part of the control group (Basic Savings) received a savings promotion (brochure plus verbal reinforcement) and an explanation of contract terms, and were offered the chance to open a savings account at the time of loan disbursement. In the first treatment arm (Open Treatment), clients taking new loans were offered the opportunity to define a monthly savings deposit that they would then be prompted to make each time they made a loan payment. In the second treatment arm (Default Treatment), clients were offered this same option, but told that the bank would set the default deposit amount at 10% of the loan payment, unless clients decide to change it.
Experimental Design Details
Randomization Method
The three financial products were randomized across the 20 microfinance branches of CHN, stratified on the baseline number of clients. This was done by ranking the 20 branches in increasing size, randomly drawing the treatment of the smallest branch, and then applying the next treatment to the following branch until one reaches them all, where treatments are taken in the order Basic, Open, and Default.
Randomization Unit
microfinance branches of CHN
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
20 microfinance branches of CHN
Sample size: planned number of observations
1,375 individuals (no specific number of observations planned beforehand)
Sample size (or number of clusters) by treatment arms
6 branches in the Basic arm, 7 in the Open arm, and 7 in the Default arm.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
March 31, 2009, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
September 01, 2008, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
20 microfinance branches of CHN
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
There was no attrition from the study because we used institutional data and studied cumulated balances in the bank as of the end of the study, so an individual who had left the bank and closed the account was simply recorded as having a 0 institutional savings balance. Total observations were 1,375 individuals.
Final Sample Size (or Number of Clusters) by Treatment Arms
20 microfinance branches
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
(no abstract)
Citation
Atkinson, Jesse, Alain de Janvry, Craig McIntosh, and Elisabeth Sadoulet. 2013. "Prompting Microfinance Borrowers to Save: A Field Experiment from Guatemala." Economic Development and Cultural Change 62(1): 21-64.
URL
https://www.povertyactionlab.org/sites/default/files/publications/621%20Savings%20Guatemala%20Published.pdf

Reports & Other Materials