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Prices or Knowledge-Determining Demand for Banking Services in Indonesia
Last registered on December 16, 2015

Pre-Trial

Trial Information
General Information
Title
Prices or Knowledge-Determining Demand for Banking Services in Indonesia
RCT ID
AEARCTR-0000984
Initial registration date
December 16, 2015
Last updated
December 16, 2015 12:16 PM EST
Location(s)
Region
Primary Investigator
Affiliation
HBS
Other Primary Investigator(s)
PI Affiliation
The London School of Economics
PI Affiliation
The World Bank
PI Affiliation
Harvard Business School
Additional Trial Information
Status
Completed
Start date
2006-03-21
End date
2011-11-12
Secondary IDs
Abstract
Financial development is critical for growth, but its micro-determinants are not well understood. We test leading theories of low demand for financial services in emerging markets, combining novel survey evidence from Indonesia and India with a field experiment. We find a strong correlation between financial literacy and behavior. However, a financial education program has modest effects, increasing demand for bank accounts only for those with low levels of education or financial literacy. In contrast, small subsidies greatly increase demand. A follow-up survey confirms these findings, demonstrating the newly opened accounts remain open and in use two years after the intervention.
External Link(s)
Registration Citation
Citation
Cole, Shawn et al. 2015. "Prices or Knowledge-Determining Demand for Banking Services in Indonesia." AEA RCT Registry. December 16. https://doi.org/10.1257/rct.984-1.0.
Former Citation
Cole, Shawn et al. 2015. "Prices or Knowledge-Determining Demand for Banking Services in Indonesia." AEA RCT Registry. December 16. https://www.socialscienceregistry.org/trials/984/history/6341.
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Experimental Details
Interventions
Intervention(s)
There were two interventions in this experiment—a financial literacy training program and an assignment of financial incentives (described below)

1) Financial Literacy Training -- approximately half of sample received an invitation to a 2 hour financial literacy training program.
2) Financial Incentives (assigned independent of financial literacy treatment assignment) – a high, medium, or low financial incentive to open a bank account was offered to participants in the experimental sample.
Intervention Start Date
2007-04-07
Intervention End Date
2008-04-08
Primary Outcomes
Primary Outcomes (end points)
Opening of Bank Account within two months of intervention
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The experiment began with 1,920 households in total across 64 villages surveyed at baseline. 23 of the 64 villages were dropped from the sample because surveyors were collaborating with participants to ensure they received the high level incentive. This left 1,230 households. 736 of these households did not have a bank account, qualifying them for the experiment. 564 out of 736 households ultimately agreed to participate in the experiment. Of these, 274 were randomly assigned to receive an invitation to participate in a 2 hour financial literacy training program (held within one month of the baseline survey). All 564 participants were randomly assigned to either a low, medium, or high incentive level. All participants were offered a bank account and our main outcome variable of interest is whether the household opened a bank account. Whether a household opened a bank account is measured by financial incentives claims—if participants mailed a postage-paid form indicating their name and bank account number within 2 months of the intervention, they received either 25,000, 75,000, or 125,000 Rp. A follow up survey was conducted 2 years later amongst households who had opened an account to assess the persistence of account opening and usage.
Experimental Design Details
Randomization Method
randomization done in office by a computer
Randomization Unit
household level
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
64 villages
Sample size: planned number of observations
1,920 households
Sample size (or number of clusters) by treatment arms
564 participated in experiment

Financial Literacy training treatment: 274 / 564

Financial Incentives: low (170), middle (190), high (204)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
N/A
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Committee on the Use of Human Subjects at Harvard University
IRB Approval Date
2007-04-03
IRB Approval Number
F14757
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
April 08, 2008, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
April 08, 2008, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
64 villages
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
564
Final Sample Size (or Number of Clusters) by Treatment Arms
564 participated in experiment Financial Literacy training treatment: 274 / 564 Financial Incentives: low (170), middle (190), high (204)
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers
Abstract
Financial development is critical for growth, but its micro-determinants are not well understood. We test leading theories of low demand for financial services in emerging markets, combining novel survey evidence from Indonesia and India with a field experiment. We find a strong correlation between financial literacy and behavior. However, a financial education program has modest effects, increasing demand for bank accounts only for those with low levels of education or financial literacy. In contrast, small subsidies greatly increase demand. A follow-up survey confirms these findings, demonstrating the newly opened accounts remain open and in use two years after the intervention.
Citation
Cole, Shawn, Thomas Sampson, and Bilal Zia. "Prices or knowledge? What drives demand for financial services in emerging markets?." The Journal of Finance 66.6 (2011): 1933-1967.