Banking on Trust - CEGAcega.berkeley.edu/.../Banking_on_Trust_-_Paul_Gertler.pdf · 2016-05-19 ·...
Transcript of Banking on Trust - CEGAcega.berkeley.edu/.../Banking_on_Trust_-_Paul_Gertler.pdf · 2016-05-19 ·...
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BankingonTrust:
HowDebitCardsHelpthePoorSaveMore
PaulGertlerUCBerkeley
WithPierreBachas,SeanHigginsandEnriqueSeira
May2016
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Trust"Virtuallyeverycommercialtransac1onhaswithinitselfanelementoftrust....[and]muchoftheeconomicbackwardnessintheworldcanbeexplainedbythelackofmutualconfidence."
--KennethArrow(1972)
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Trust"Virtuallyeverycommercialtransac1onhaswithinitselfanelementoftrust....[and]muchoftheeconomicbackwardnessintheworldcanbeexplainedbythelackofmutualconfidence."
--KennethArrow(1972)
❑ Importantwhenexchangemoneyforpromises
❑ EssenValwherelegalinsVtuVonsthatenforcementofcontractsisweak
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Lowtrustinbanks:aworldwidephenomenon
Source:WorldValuesSurvey
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LowtrustinbanksinMexico
❑ FinancialCrises• 1995-96• 2008-09
❑ HighProfileBankFraud• 1338newspaperstorieson
bankfraudin2014-15• “HowtoSaveforYour
Gradua1onandAvoidFraud”• “Re1rementSavings
AccountswithMinimalRiskofFraud.”
❑ Worriedabout• Hiddenfees• Outrightfraud
Source:WorldValuesSurvey
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LowTrustAssociatedwithLowUseofBanks
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DebitCards&MobileMoney❑ TrustnotinnatecharacterisVc,
butinfluencedbyexperienceandinformaVon
❑ Mobilemoney&debitcards▪ LowertransacVonscostsfor
accesstofunds▪ Alsolowercostofmonitoring
(checking)balances
▪ Monitorforfraud&buildtrust
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ExamineEffectofDebitCardsonTrustandSavingsinOPORTUNIDADES• CondiVonalcashtransferprogram• Programreaches6millionfamilies(20%ofMexico)
• In2005Transferdepositeddirectlyintoasavingsaccount• Paideverybimester($150average)• Nodebitcards
• In2009,Ahacheddebitcardstoaccounts
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TimingofRoll-outandBankAccountData
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AdministraVveBankAccountData
Over340,000Bansefibankaccounts◦ UrbanOportunidadesrecipients
Averagebalanceofeachaccounteachbimester
Fouryears:Nov-Dec2007toSep-Oct2011
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UseofAccounts:WithdrawalsperBimester
• Thisleadstoa“mechanicaleffect”onaccountbalances• Wecalculatemechanicaleffectattheaccount-bimesterlevel• Subtractitfromaveragebalancetogetnetbalance
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• SinceFEwithlaggeddependentvariablebiased(Nickell,1981),esVmateusingsystemGMM(BlundellandBond,1998)• SEsclusteredbybranchwithWindmeijer(2005)finitesamplecorrecVon
EffectonMarginalPropensitytosave
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WhatexplainsdelayedeffectoverVme?
Learningtousetechnology(ATM,debitcard)
Fearthatsavingswillleadtobeingdroppedfromprogram
BuildingtrustinfinancialinsVtuVons Analyses:◦ Twosurveysdesignedtoevaluatethechangetodebitcards
◦ AdministraVvedataonaccountbalancechecks
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TesVngtrustvs.learning
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TesVngtrustvs.learning
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Buildingtrustthroughbalancechecks• SameresultinadministraVvedata• BalancechecksdecreaseoverVmewithcard
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IncreaseinoverallsavingsorsubsVtuVon?EvidencefromHouseholdSurveys
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• FromMPSspecificaVonusingadminaccountdata,amer1yearsavingsincreaseby5.4%ofincome
• Fromhouseholdsurveydata,savingsincrease4.8%ofincome
IncreaseinOverallSavings(BackofEnvelope)
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DoesMoneyBurnaHoleinYourPocket?
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Conclusions• Trustinbanks1reasonpoordonotusefinancialinsVtuVons
• Debitcards(mobilemoney)• Reducecostofaccessingsavings• butalsoreducecostofmonitoring• Buildtrustandtherebysavings
• SavingsinBanksmayhelpdealwithproblemsassociatedwithinformalsavings
• Policies• Depositinsurance&Hotlinehelp• Trusttrainingpartoffinancialliteracyprograms
• Cashtransferprogramsofferseasywaytotargetthepoorthrough“opt-out”strategies• Mayneed“trustTraining”tobeeffecVve