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How Debit Cards Enable the Poor to Save More

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  • Pierre Bachas
  • Paul Gertler
  • Sean Higgins
  • Enrique Seira

Abstract

We study a natural experiment 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 before receiving debit cards, few beneficiaries used the accounts to make more than one withdrawal per period, or to save. With cards, beneficiaries increase their number of withdrawals and check their balances frequently; the number of checks decreases over time as their reported trust in the bank and savings increase. Their overall savings rate increases by 3–4 percent of household income.

Suggested Citation

  • Pierre Bachas & Paul Gertler & Sean Higgins & Enrique Seira, 2017. "How Debit Cards Enable the Poor to Save More," NBER Working Papers 23252, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23252
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    Cited by:

    1. Carolina Laureti & Alain De Janvry & Elisabeth Sadoulet, 2017. "Flexible Microfinance Products for Financial Management by the Poor: Evidence from SafeSave," Working Papers CEB 17-036, ULB -- Universite Libre de Bruxelles.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • 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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