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The Limits of Commitment: Who Benefits from Illiquid Savings Products?

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  • Buehren,Niklas
  • Goldstein,Markus P.
  • Klapper,Leora
  • Koroknay-Palicz,Tricia
  • Schaner,Simone Gabrielle

Abstract

Working with a private bank in Ghana, this study examines the impacts of a commitment savings product designed to help clients taking repeated overdrafts break their debt cycles. Overall, the product significantly increased savings with the bank without increasing overdrafts. However, after accounting for other sources of savings, the study finds that clients with above-median baseline overdraft histories do not accrue new savings during the commitment period. Rather, they draw down other savings to offset the committed amount and take on new debt. In contrast, individuals with below-median overdraft histories significantly increase savings during and after the commitment period.

Suggested Citation

  • Buehren,Niklas & Goldstein,Markus P. & Klapper,Leora & Koroknay-Palicz,Tricia & Schaner,Simone Gabrielle, 2018. "The Limits of Commitment: Who Benefits from Illiquid Savings Products?," Policy Research Working Paper Series 8633, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8633
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    File URL: http://documents.worldbank.org/curated/en/145051540998851212/pdf/WPS8633.pdf
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    Cited by:

    1. Shilpa Aggarwal & Valentina Brailovskaya & Jonathan Robinson, 2023. "Saving for Multiple Financial Needs: Evidence from Lockboxes and Mobile Money in Malawi," The Review of Economics and Statistics, MIT Press, vol. 105(4), pages 833-851, July.

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