Transaction Costs, Bargaining Power, and Savings Account Use in Kenya

Efforts to promote financial inclusion in developing countries often entail making formal bank accounts cheaper and easier to access. Such increases in liquidity may be counterproductive, however, when individuals face demands on their savings from others, or internal self-control problems. To study these issues, I conducted a field experiment where access to ATM cards (which reduced withdrawal fees by over 50 percent and allowed withdrawals outside of bank hours) was randomly assigned to over 1,100 newly opened bank accounts in Kenya. While the cards substantially increased account use, the positive treatment effect is entirely driven by accounts owned by men and jointly owned bank accounts - treatment effects for women's accounts are negative and not significantly different from zero. My results suggest that one important driver of this difference is intrahousehold concerns: both men and women with high levels of proxied bargaining power respond positively to the ATM treatment, while both men and women with low levels of bargaining power respond negatively. In contrast, I find no evidence that differences are driven by self-control or financial literacy.