Working Paper: NBER ID: w28249
Authors: Emily Breza; Martin Kanz; Leora F. Klapper
Abstract: How do inexperienced consumers learn to use a new financial technology? We present results from a field experiment that introduced payroll accounts in a population of largely unbanked factory workers in Bangladesh. In the experiment, workers in a treatment group received monthly wage payments into a bank or mobile money account while workers in a control group continued to receive wages in cash, with a subset also receiving an account without automatic wage payments. We find that exposure to payroll accounts leads to increased account use and consumer learning. Those receiving accounts with automatic wage payments learn to use the account without assistance, begin to use a wider set of account features, and learn to avoid illicit fees, which are common in emerging markets for consumer finance. The treatments have real effects, leading to increased savings and improvements in the ability to cope with unanticipated economic shocks. We conduct an additional audit study and find suggestive evidence of market externalities from consumer learning: mobile money agents are less likely to overcharge inexperienced customers in areas with higher levels of payroll account adoption. This suggests potentially important equilibrium effects of introducing accounts at scale.
Keywords: financial technology; consumer learning; payroll accounts; financial inclusion; Bangladesh
JEL Codes: G21; G5; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exposure to payroll accounts (H55) | increased account use (E01) |
| exposure to payroll accounts (H55) | consumer learning (D18) |
| increased account use (E01) | avoidance of common illicit fees (H26) |
| exposure to payroll accounts (H55) | improved responses to economic shocks (F41) |
| increased account use (E01) | increased savings (D14) |
| increased payroll account adoption (J39) | reduced overcharging by mobile money agents (L96) |
| exposure to payroll accounts (H55) | increased trust in financial systems (F65) |