What are the headwaters of formal savings? Experimental evidence from Sri Lanka

Callen, Michael ORCID: 0000-0002-8408-1404, De Mel, Suresh, McIntosh, Craig and Woodruff, Christopher (2019) What are the headwaters of formal savings? Experimental evidence from Sri Lanka. Review of Economic Studies, 86 (6). 2491 - 2529. ISSN 0034-6527

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Abstract

The world's poor are seeing a rapid expansion in access to formal savings accounts. What is the source of savings when households are connected to a formal account? We combine a high-frequency panel survey spanning two and a half years with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. We find that the headwaters of formal savings lie in sacrificed leisure time: households work more, and improved savings options generate an increase in labour effort in both self-employment and in the wage market. The results suggest that the labour allocation channel is an important mechanism linking savings opportunities to income.

Item Type:	Article
Official URL:	https://academic.oup.com/restud
Additional Information:	© 2019 The Authors
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HN Social history and conditions. Social problems. Social reform H Social Sciences > HG Finance
JEL classification:	O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O16 - Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Personal Finance G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Date Deposited:	17 Jan 2020 09:51
Last Modified:	12 Dec 2024 02:02
URI:	http://eprints.lse.ac.uk/id/eprint/103022

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