In recent decades, interest has grown about interventions intended to alleviate savings constraints faced by agricultural labor in developing countries.The researchers conducted a randomized field experiment to evaluate the effect of facilitating saving in a formal savings account on agricultural inputs. 299 groups of 10-20 Malawian tobacco farmers were randomized into an "ordinary" treatment group, a "commitment" treatment group, or a control group. Farmers in all treatment groups were offered assistance opening a savings account with direct deposit of their tobacco proceeds, while the commitment treatment group receive and additional offer of assistance setting up an additional savings account with a commitment device that only allowed deposited funds to be withdrawn after at a predetermined date in the future. Farmers in the control group were not prohibited from opening savings accounts, but received no assistance in doing so. A second dimension of the intervention that was intended to test the effect public knowledge on saving and investment behavior using a raffle was implemented, but take-up was too low for the PIs to draw meaningful conclusions.
The researchers found positive, statistically significant, and economically significant treatment effects on several agricultural input measures, such as land cultivated and monetary value of agricultural inputs. Similar results were found on outcome measures such as crop sale proceeds, farm profits, and household expenditures.
However, on average the majority of funds were withdrawn soon after being deposited, and the amounts which were saved were roughly one fifth of the value of the additional inputs. The PIs conclude that alleviating savings constraints is not the primary mechanism through which the treatment affects the outcomes.