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What Are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka

Author

Listed:
  • Callen, Michael

    (Harvard University)

  • De Mel, Suresh

    (University of Peradeniya)

  • McIntosh, Craig

    (University of CA, San Diego)

  • Woodruff, Christopher

    (University of Warwick)

Abstract

When households increase their deposits in formal bank savings accounts, what is the source of the money? We combine high-frequency surveys with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. In this context, the headwaters of formal savings are to be found in sacrificed leisure time: households work more, and work more on the wage market when savings options improve. These results suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.

Suggested Citation

  • Callen, Michael & De Mel, Suresh & McIntosh, Craig & Woodruff, Christopher, 2015. "What Are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka," Working Paper Series rwp15-011, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp15-011
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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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