Haas School of Business
University of California, Berkeley
Berkeley, CA 94720
Institutional Affiliation: University of California at Berkeley
NBER Working Papers and Publications
|March 2017||How Debit Cards Enable the Poor to Save More|
with Pierre Bachas, Paul Gertler, Enrique Seira: w23252
While formal savings can have a number of positive impacts for the poor, savings and active account use remain low. We study an at-scale natural experiment in Mexico in which debit cards are rolled out to beneficiaries of a cash transfer program, who already received transfers directly deposited into a savings account. Using administrative account data and household surveys, we find that after two years with a card, beneficiaries accumulate a savings stock equal to 2 percent of annual income. This effect size is larger than the impact of other interventions studied in the savings literature. We show that the increase in formal savings appears to be an increase in overall savings, financed by a voluntary reduction in current consumption. Debit cards increase account usage and savings throug...