Commitments to Save: A Field Experiment in Rural Malawi

Abstract

The Impact Evaluation Series has been established in recognition of the importance of impact evaluation studies for World Bank operations and for development in general. The series serves as a vehicle for the dissemination of findings of those studies. Papers in this series are part of the Bank's Policy Research Working Paper Series. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Saving more in groups: Field experimental evidence from Chile

“…While the amounts of savings are relatively small in absolute terms, Kast and Pomeranz (2014) show that even such small amounts can have significant effects on consumption smoothing and borrowing needs. Correspondingly, participants in the Peer Group Treatment subsequently claimed to be significantly less anxious about their financial future, consistent with other studies showing that savings can make a substantial difference in participants' lives (e.g., Burgess and Pande, 2005;Ashraf et al, 2010;Brune et al, 2011;Dupas and Robinson, 2013a,b).…”

Smallholder Risk Management in Developing Countries

“…While the "lock-in" of funds may commit households to save more, this lack of flexibility could also lead to a lack of liquidity at a time of an adverse shock. The evidence in Brune et al (2011) was particularly striking in this regard. Even households which opted to open commitment savings account put only a small portion of their savings in commitment accounts, preferring to use ordinary accounts for the larger share of their savings.…”

“…Presenting evidence from the Philippines, Ashraf et al (2009) found out that take-up of commitment savings products was higher among women and access to the product resulted in significantly higher savings one year later. In a direct application of similar principles to smallholder farmers, Brune et al (2011) offered commitment savings products to farmers in rural Malawi; they found that access to a commitment treatment led to increases in deposits at the partner bank, and over the next agricultural year caused increases in agricultural input use, crop sales, and household expenditures. Thus it seems that commitment savings devices could play a role in boosting agricultural households' ability to save, which can play an important role in their ability to smooth consumption in the face of agricultural risk.…”

How conditional cash transfers work

“…For example, access to savings devices has been shown to have a positive impact on household income, by allowing families to make productive investments (Brune et al, 2011). Furthermore, there is evidence that poor households with access to health savings accounts are better prepared to afford medical care in a health emergency (Dupas and Robinson, 2013).…”