Review of Economic Studies Vol. 86 No. 6 2019
What Are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka
Abstract
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.
- DOI
- 10.1093/restud/rdz020
- Volume
- 86
- Issue
- 6
- Pages
- 2491-2529
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref