Work

How Debit Cards Enable the Poor to Save More

Year: 2017

Type: report

Abstract: We study an at-scale natural experiment in which debit cards are given to cash transfer recipients who already have a bank account.Using administrative account data and household surveys, we find that beneficiaries accumulate a savings stock equal to 2 percent 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, leading beneficiaries to check their account balances frequently and build trust in the bank.

Source: National Bureau of Economic Research

DOI: 10.3386/w23252

Authors: Pierre Bachas, Paul Gertler, Sean Higgins, Enrique Seira

Institutions: National Bureau of Economic Research, Instituto Tecnológico Autónomo de México, University of California, Berkeley

Language: English

Topic: Microfinance and Financial Inclusion

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: No poverty

Open Access status: green

Funder: National Science Foundation