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Seminarios académicos y conferencias

Paul Gertler, Berkeley

Banking on Trust: How Debit Cards Help the Poor to Save More

Coautores: Pierre Bachas, Sean Higgins, Enrique Seira

15 noviembre 2017 - 15:30 hrs.

Sala 113, Facultad de Ciencias Económicas y Administrativas UC

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Abstract: Trust is an essential element of economic transactions, but trust in financial institutions in especially low among the poor, which may explain in part why the poor do not save formally. Debit cards provide not only easier access to savings (at any bank’s ATM as opposed to the nearest bank branch), but also a mechanism to monitor bank account balances and thereby build trust in financial institutions. We study a natural experiment in which debit cards wererolled out to beneficiaries of a Mexican conditional cash transfer program, who were already receiving their transfers in savings accounts through a government bank. Using administrative data on transactions and balances in over 300,000 bank accounts over four years, we find that
after receiving a debit card, the transfer recipients do not increase their savings for the first 6 months, but after this initial period, they begin saving and their marginal propensity to save increases over time. During this initial period, however, they use the card to check their balances frequently; the number of times they check their balances decreases over time as their reported trust in the bank increases. Using household survey panel data, we find the observed effect represents an increase in overall savings, rather than shifting savings; we also find that consumption of temptation goods (alcohol, tobacco, and sugar) falls, providing evidence that
saving informally is dificult and the use of financial institutions to save helps solve self-control problems.