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Savings by and for the Poor: A Research Review and Agenda-Working Paper 346

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  • Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman

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Abstract

The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioral frictions. Undersaving can have important welfare consequences: variable consumption, low resilience to shocks, and foregone profitable investments. We lay out five sets of constraints that may hinder the adoption and effective usage of savings products and services by the poor: transaction costs, lack of trust and regulatory barriers, information and knowledge gaps, social constraints, and behavioral biases. We discuss each in theory, and then summarize related empirical evidence, with a focus on recent field experiments. We then put forward key open areas for research and practice.

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Bibliographic Info

Paper provided by Center for Global Development in its series Working Papers with number 346.

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Length: 54 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:cgd:wpaper:346

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Web page: http://www.cgdev.org

Related research

Keywords: Savings; Randomized Evaluation; Poverty;

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References

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Cited by:
  1. Ximena Pena & Carmen Hoyo & David Tuesta, 2014. "Determinantes de la inclusion financiera en Mexico a partir de la ENIF 2012," Working Papers 1414, BBVA Bank, Economic Research Department.

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