The world’s poor are seeing a rapid expansion in access to formal savings accounts. What is the source of savings when households are connected to a formal account? We combine a high-frequency panel survey spanning two and a half years with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. We find that the headwaters of formal savings lie in sacrificed leisure time: households work more, and improved savings options generate an increase in labour effort in both self-employment and in the wage market. The results suggest that the labour allocation channel is an important mechanism linking savings opportunities to income.

We introduce a new mobile money interface that permits Sri Lankans to deposit mobile airtime balances directly into a formal bank account. Randomizing access and prices, we find a small increase in savings deposits with the partner institution and formal banks more generally, but no change in overall savings. When the deposit transaction costs are completely removed, only 26% use the mobile deposit service and only 7% use it frequently. Our results imply that deposit transaction costs are not a significant barrier to increasing savings, limiting the potential gains of mobile-linked savings products for financial inclusion.