Working Paper: NBER ID: w23252
Authors: Pierre Bachas; Paul Gertler; Sean Higgins; Enrique Seira
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.
Keywords: debit cards; savings; financial inclusion; cash transfer programs
JEL Codes: D14; D83; G21; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| debit card access (E40) | increased savings (D14) |
| debit card access (E40) | increased number of active account users (D16) |
| debit card access (E40) | increased transactions and withdrawals (E49) |
| increased savings (D14) | reduced consumption (E21) |
| debit card access (E40) | increased trust in financial institutions (G21) |
| increased trust in financial institutions (G21) | increased savings (D14) |
| debit card access (E40) | unconfounded savings behavior (D14) |