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

Callen, Michael, 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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Identification Number: 10.1093/restud/rdz020


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:
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: 01 Nov 2021 01:10

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