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Saving, by default - Statu quo bias in financial inclusion programs
Last registered on December 15, 2016

Pre-Trial

Trial Information
General Information
Title
Saving, by default - Statu quo bias in financial inclusion programs
RCT ID
AEARCTR-0000387
Initial registration date
May 19, 2014
Last updated
December 15, 2016 5:20 AM EST
Location(s)
Region
Primary Investigator
Affiliation
NHH - Norwegian School of Economics
Other Primary Investigator(s)
PI Affiliation
The Graduate Institute of International and Development Studies
Additional Trial Information
Status
On going
Start date
2013-09-01
End date
2017-12-29
Secondary IDs
C93, D03, G21, O16
Abstract
The first objective of most financial inclusion plans consists in having as many people as possible opening a bank account. A consecutive important step, for those who opened an account, is to receive payments on that account.
Due to a statu quo bias, the ‘default option’ may strongly influence human behavior. For those who receive money on their bank accounts, that money is saved, by default. Unless they take the active step of withdrawing it from their account, their money will stay on the account. On the other hand, we expect people paid in cash to spend their money. Unless they take the active step to deposit it on their account or to freeze it under another form.
Based on that hypothesis, the objective of this study is to test whether moving beyond the first step of opening bank accounts and reaching the second step where people are paid on their accounts indeed substantially increases savings levels. And, if it does, whether that increase can be attributed to the ‘default option’ behavior that we mentioned.
External Link(s)
Registration Citation
Citation
Somville, Vincent and Lore Vandewalle. 2016. "Saving, by default - Statu quo bias in financial inclusion programs." AEA RCT Registry. December 15. https://doi.org/10.1257/rct.387-3.0.
Former Citation
Somville, Vincent, Vincent Somville and Lore Vandewalle. 2016. "Saving, by default - Statu quo bias in financial inclusion programs." AEA RCT Registry. December 15. http://www.socialscienceregistry.org/trials/387/history/12455.
Experimental Details
Interventions
Intervention(s)
The interventions take place in rural Chhattisgarh. In eighteen villages were a new banking technology has recently been introduced.
We select a random sample of people who opened a bank account (group A) and a random sample of people who did not. That second sample (of people without account) is subject to the first treatment: we give an account to two third of them.
After this first treatment, we are left with three groups: A – already had an account, B – received a new account, and C – did not have an account and is not offered one.
Each respondent is being interviewed every week, for 7 to 13 weeks. The respondents receive a compensation of Rs150 after each interview. The second treatment in the experiment is a randomization of the way the weekly compensation is paid. Half of the respondents with a BCSA account receive Rs150 directly on their account (treated), while the others receive it in cash (control).
Intervention Start Date
2014-02-24
Intervention End Date
2014-05-31
Primary Outcomes
Primary Outcomes (end points)
The first hypothesis that we want to test is whether the treatment increases the savings on the person’s account. The outcome variable in this case is the account balance (Y1), as recorded in the accounts data.
In the second part of the analysis, we use the survey data to test the treatment effect on the other household’s savings and financial flows. We first consider the treatment effect on the household’s total net monetary flows (Y2).
In addition, we also test the treatment effects on:
- the households savings in informal groups (such as SHGs) (Y3)
- other financial assets, such as jewelry, money guarded by others, etc. (Y4)
Primary Outcomes (explanation)
All our outcome variables are based on the bank account’s data and our weekly surveys. We will use both their weekly value and their value over the whole course of the experiment.
The account balance (Y1), is in fact measured as: (i) the final balance, we also plan to use (ii) the average balance on the account; (iii) the number of days the respondent had a positive balance; (iv) the maximum balance that was recorded. Villagers paid on the account are advantaged in these measures, since Rs150 are deposited on their accounts every week. To undo this advantage, we only include amounts that were at least 24 hours on the account for (ii), (iii) and (iv). This means that the money that is immediately withdrawn after we deposited it is not included in the calculation of the balances.
The total net monetary flows (Y2), which is the sum of all the money that enters the household:
- Income from farming and livestock
- Income from forest products
- Income from wage employment and self-employment
- Income from renting out assets (land, machinery, animals, etc.)
- All transfers received (remittances, public transfers, gifts, and other private transfers)
- Loans and credits repaid
from which we deduct the total amount of money that leaves the household:
- Purchase of goods and services for consumption
- Purchase of inputs (farming, livestock, business)
- Purchase of durables assets
- Rents paid for hiring assets (land, machinery, animals, etc.)
- All transfers made by household members
- Loans and credits paid
- Insurance payments
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The study is carried out in collaboration with the Indian NGO Basix Sub-k. It builds on the recent expansion of the business correspondent model (BCM) in India. In collaboration with formal banks, Basix Sub-k is opening bank accounts in different States over the country. In rural areas, the NGO selects one villager to become the local banker (the business correspondent sub agent or BCSA). He receives training, a receipt machine, a finger print recognition device and a mobile phone connected through the mobile network to the partner bank. The BCSA can then use those devices to perform standard transactions on their accounts: deposits, withdrawals and transfers.
In villages where Basix Sub-k has recently opened BCSA accounts, we do weekly interviews during 7 to 13 weeks, to gather detailed information about the evolution of their household composition and the various earnings and expenditures of their household members. Because those surveys are extremely demanding, each participant is offered Rs150 after each interview.
Phase 1
To test the above hypotheses we designed the study as follows. We operate in an area with recent BCSAs. We select a random sample of people who opened an account (group A) and a random sample of people who did not. That second sample (of people without account) is subject to the first treatment: we give an account to two third of them. After this first treatment, we are left with three groups: A – already had an account, B – received a new account, and C – did not have an account and is not offered one.
The second treatment in the experiment is a randomization of the way the weekly compensation is paid. Half of the respondents with a BCSA account receive Rs150 directly on their account (treated), while the others receive it in cash (control).
We now have 5 different groups: Ac had an account and is paid cash, Aa had an account and is paid on it, Bc just received an account and is paid cash, Ba just received an account and is paid on it, C does not have an account and is paid cash. The comparison between these five groups will provide clear information on the impacts of the different steps of the financial inclusion process.
The first randomization, providing bank accounts to people who initially did not self-select into the new banking system, has two main goals:
- Measuring the first step of the process: having a bank account versus not having one
- Evaluating the importance of the initial self-selection. Existing studies suffer from the caveat that they only observe impacts on the pool of self-selected individuals (corresponding to our group A). Those impacts may not be representative of what a large scale financial inclusion plan (with accounts opened for everyone) would achieve.

The second randomization (cash versus account) aims at measuring the second step of the financial inclusion process: going from having a bank account but receiving cash payments, to having a bank account and being paid on that account. Importantly, given that (i) all respondents have an account (in groups A and B); (ii) there is no direct cost in depositing or withdrawing; (iii) all respondents in a village receive their compensation at the same location, close to the BCSA; we can attribute the treatment effect to the ‘default option’ described above.

Phase 2
One month after the last week of interviews of phase 1, we will re-start the weekly surveys for an additional period of four weeks. During these weeks, we will compensate everyone in cash as to test whether the initial treatments have impacts that last in the medium term.
Experimental Design Details
Randomization Method
1st randomization :
Two thirds of the sampled people without an account are offered one. The randomization is blocked by village and gender.
2d randomization:
Half the respondents in each block (defined by the groups – A and B, gender and village) are attributed to treatment.
The randomizations are done with the software Stata.
Randomization Unit
Unit of randomization: individual
Blocks:
- 1st treatment is blocked by village and gender
- 2d treatment is blocked by village, by gender and by sample group (A - self-selected into opening an account, B - did not open an account but is offered a new account, C - did not open an account and is not offered one)
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
18 villages
Sample size: planned number of observations
32 individuals per villages. 576 individuals. surveyed weekly for 7 to 13 weeks.
Sample size (or number of clusters) by treatment arms
Group A paid cash = 126
Group A paid account = 126
Group B paid cash = 108
Group B paid account = 108
Group C = 108
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

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Post Trial Information
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Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
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Reports, Papers & Other Materials
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