Study Overview
We study an at-scale natural experiment in which debit cards were given to cash transfer recipients who already had a bank account.
Study Results
Using administrative account data and household surveys, we find that beneficiaries accumulated a savings stock equal to 2% of annual income after two years with the card. The increase in formal savings represents an increase in overall savings, financed by a reduction in current consumption. There are two mechanisms. First, debit cards reduce transaction costs of accessing money. Second, they reduce monitoring costs, which led beneficiaries to check their account balances frequently and build trust in the bank.
Intervention: Conditional cash transfer program with debit cards tied to savings accounts
Populations: Peri-urban households
Journal Publication: Bachas, P., Gertler, P., Higgins, S. and Seira, E. (2021), How Debit Cards Enable the Poor to Save More. The Journal of Finance, 76: 1913-1957. https://doi.org/10.1111/jofi.13021P
News & media
Digital financial services go a long way: Evidence from Mexico
June 8, 2018
Over two billion adults around the world do not have a bank account (World Bank 2017). Most poor households lack sufficient savings to deal with shocks such as drought or illness (Dercon 2002). Why is it so difficult for people to save in poor countries? Can digital financial services and fintech help?