This study took place in the catchment area of banks in three market centers in Western Kenya. A census of all households in these catchment areas was carried out between August and September 2009. The census survey collected information on demographic characteristics of the household, sources of income, as well as access to financial services, knowledge and perceptions of available financial services, and saving practices. A total of 1,898 households were surveyed during the census exercise. Only 20% of these households had a member with a bank account, despite the fact that the average distance to the closest deposit-taking financial institution was (by design) only 1.6 kilometers, suggesting that physical access was unlikely to be a limiting factor. Account ownership was predominantly male: 21% of men had a bank account, against only 10% of women.
Of the 1,898 households in the census, about half (989) were selected to participate in the study. Those households excluded from the study were those with at least one bank account holder (20%), and relatively atypical households, i.e. polygamous households (8%) and households with no female head (11%). Of the 989 sampled households, we could survey both (when applicable) households heads in survey round 1 in 931 cases, and again in at least one of the following rounds in 885 of the cases. Our analysis sample thus consists of 885 households for whom we have at least one follow-up survey round.
Out of the household sample, we created a sample of household heads. This individual-level sample included either one or two individuals per household: the female head for single female-headed households, and both the female and male head for dual-headed households. We then randomized these individuals into treatment and control groups. The randomization was done in May 2010, after stratifying the sample by household composition (single female-headed or dual-headed), primary occupation, and market center. Note that the randomization was conducted at the individual, not the household level. Thus, among dual-headed households, while there are households in which either, both, or neither spouse got the account, the size of each group was determined by chance -- and consequently, the four groups are not equal sized. Table A1 shows the final breakdown of households in our analysis sample. Among dual-headed households, 17% had no one assigned to the treatment, 33% had both heads assigned to the treatment group, 26% had only the female head assigned to treatment and 24% had only the male head assigned to treatment. Among single female-headed households, 50% were assigned to the treatment group.
Individuals selected for the treatment received a nominal, non-transferable voucher for a free savings account. As mentioned above, the study took place around three market centers. In one of these market centers, both the Village Bank and the Commercial Bank have a branch, and the voucher was redeemable at either bank. In the other two market centers, only the Village Bank had a branch, so respondents in those markets were given a voucher redeemable only at the Village Bank. The experiment waived all account opening and maintenance fees, but did not cover any withdrawal fees. In total, the subsidy amounted to $5 for accounts at the village bank and $2.50 plus $0.60 a month for maintenance at the commercial bank. The commercial bank account came with a free ATM card.
The vouchers were delivered to people in their homes between late May and early July 2010. During that visit, individuals received information on how the banks and accounts worked, and when and how to redeem the voucher. Upon opening the account, individuals could choose to open the account jointly with their spouse or alone. Sixty-nine percent of vouchers that were distributed were redeemed. Only 5.7% of accounts that were opened were joint accounts.