Finding the Headwaters of Household Financial Assets: Savings Behaviors of Rural Households and the Use of Mobile Technologies

In low-income and developing countries, as much as a third of the labor force is self-employed. Those self-employed individuals with the lowest levels of capital investment are typically unbanked and without savings accounts or credit from formal financial institutions. Christopher Woodruff’s project examines how participants in informal credit exchanges react to incentives to build savings in a formal savings bank. The project hopes to better understand if formal savings banks influence the use of informal financial institutions, if formal savings increase investment in business assets, and what expenditures might be reduced to in order to build a savings balance.


Research Questions: 
  • Do formal financial services, in this case savings facilities, crowd out or complement informal financial transactions in low-income households?
  • Does the availability of formal savings mechanisms lead to accumulation of assets either in the household or in enterprises operated by the household?
  • Where do funds deposited in formal savings accounts come from? That is, which expenditures are reduced to provide the funds that allow households to build savings balances? Or, alternatively, does the money come from conversion of assets held in other liquid or semi-liqui forms (e.g. cash or jewelry)?
Data Notes: 

Survey Time Frame and Rounds:

  • Baseline, August 2010
  • Monthly follow-up rounds for 12 months.

Modules: All are administered to a single individual and include:

  • Household characteristics
  • Agricultural business
  • Non-agricultural business
  • Consumption

Survey size: 800 Individuals (400 members of 100 separate ROSCAS and 400 non-ROSCAS members)

Sample: ROSCA members and non-ROSCA members

Intervention: Around half of the sample will be offered weekly collections from a savings bank, using a point-of-service terminal to make instantaneous deposits. Collections will be made at the house or business of the treated respondent.


Read More:

National Savings Bank