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Abstract We report on a field experiment using several methods for collecting deposits made in formal bank accounts in rural areas in Sri Lanka. We find that only frequent, face-to-face collection increases aggregate household savings. Collection involving community lock boxes increases balances at the collecting bank, but not overall household savings. Only community box collection appears to have the possibility of being financially viable. The various collection methods allow us to unbundle the role of frequency, salience and habit formation in deposit decisions. We find that frequency and salience affect the number of transactions, but not the level of savings. We report on a field experiment using several methods for collecting deposits made in formal bank accounts in rural areas in Sri Lanka. We find that only frequent, face-to-face collection increases aggregate household savings. Collection involving community lock boxes increases balances at the collecting bank, but not overall household savings. Only community box collection appears to have the possibility of being financially viable. The various collection methods allow us to unbundle the role of frequency, salience and habit formation in deposit decisions. We find that frequency and salience affect the number of transactions, but not the level of savings. An additional analysis of the data by Callen, De Mel, McIntosh, and Woodruff (2014) examines the how the change in financial services affects an individual’s optimal allocation of time between leisure and labor, and then between wage work and self-employment. In this context, the headwaters of formal savings are to be found in sacrificed leisure time: households work more, and work more on the wage market when savings options improve. These results suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.
Last Published September 28, 2016 06:10 PM October 19, 2016 02:49 AM
Primary Outcomes (End Points) Savings per month, transactions per month, deposits per month, withdrawals per month Savings per month, Transactions per month, Deposits per month, Withdrawals per month, Income earned, Hours worked, Employment (Self/Wage), Time allocation (Labor/Leisure), Expenditures, Consumption
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Paper Abstract When households increase their deposits in formal bank savings accounts, what is the source of the money? We combine high-frequency surveys with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. In this context, the headwaters of formal savings are to be found in sacrificed leisure time: households work more, and work more on the wage market when savings options improve. These results suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.
Paper Citation Callen, Michael, Suresh De Mel, Craig McIntosh, and Christopher Woodruff. 2014. “What are the headwaters of formal savings? Experimental evidence from Sri Lanka.” National Bureau of Economic Research, Working Paper Series, 20736.
Paper URL http://www.nber.org/papers/w20736.pdf
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