Working Paper: NBER ID: w29542
Authors: Sanghamitra W. Mukherjee; Lauren F. Bergquist; Marshall Burke; Edward Miguel
Abstract: Access to microcredit has been shown to generate only modest average benefits for recipient households. We study whether other financial market frictions—in particular, lack of access to a safe place to save—might limit credit's benefits. Working with Kenyan farmers, we cross-randomize access to a simple savings product with a harvest-time loan. Among farmers offered a loan, the additional offer of a savings lockbox increased farm investment by 11% and household consumption by 7%. Results suggest that financial market frictions can interact in important ways and that multifaceted financial access programs might unlock dynamic household gains.
Keywords: microcredit; savings; financial access; household consumption; investment
JEL Codes: G50; O13; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| savings lockbox + harvest-time loan (G51) | farm investment (Q14) |
| savings lockbox + harvest-time loan (G51) | household consumption (D10) |
| savings lockbox (D14) | kin tax pressures on savings (D14) |
| savings lockbox (D14) | financial management (G30) |
| harvest-time loan (Q14) | farm investment (Q14) |
| harvest-time loan (Q14) | household consumption (D10) |
| savings lockbox alone (D14) | consumption (E21) |
| savings lockbox alone (D14) | reinvestment (G31) |