Savings and financial inclusion: understanding behaviors to design effective processes

Gross household savings have grown during the last 10 years

Source: ENAHO: 2004 & 2015.

Legend

Average household annual savings by region, 2015(in soles)

Legend

Average household annual savings by region, 2004( in soles)

So have formal savings

Source: ASBANC

Evolution of total deposits by type of deposit(In millions of soles)

30% 31% 30% 30% 30% 28%

23% 24% 27% 26%26% 29%

46% 45% 43%44%

44% 43%

0

50000

100000

150000

200000

250000

Dic

-13

Ene-

14

Feb-

14

Mar

-14

Abr

-14

May

-14

Jun-

14

Jul-1

4

Ago

-14

Set-1

4

Oct

-14

Nov

-14

Dic

-14

Ene-

15

Feb-

15

Mar

-15

Abr

-15

May

-15

Jun-

15

Jul-1

5

Ago

-15

Set-1

5

Oct

-15

Nov

-15

Dic

-15

Ene-

16

Feb-

16

Mar

-16

Abr

-16

May

-16

Jun-

16

Jul-1

6

Ago

-16

SIGHT DEPOSITS SAVINGS DEPOSITS FIXED TERM DEPOSITS

But they remain low

Source: ENAHO 2015

75%

25%

No Yes

99%

1%

No Yes

96%

4%

No Yes

People over the age of 18: Do they have a savings account?

People over the age of 18: Do they have a long term savingsaccount?

People over the age of 18: Do they have a checking account?

65% doesn’t have access to the financial system

Source: ENAHO 2015

35%

38%

20%

3%3%1%

65%

Yes No, I couldn'tNo, not interested No, It doesn't suit me economicallyNo, I distrust the financial system No, for other reasons

¿Who are they?

People over the age of 18: Do they have access to anybank, caja municipal , caja rural or microfinanceinstitution?

¿Who are they?

Source: ENAHO 2015

People older than 18 years who don’t care saving in financial system

43%

28%

19%

11%0%

10%

20%

30%

40%

50%

60%

18-35years

36-50years

51-65years

more than65 years

Den

sity:

Fre

quen

cy W

ordi

ng

48%53%

Men Women

46%

33%

12% 10%

Secondaryincomplete

Secondaryincomplete

Incompleteupper

education

Uppereducation

81%

19%

0%

20%

40%

60%

80%

100%

Urban Rural

By age: By sex: By educational level: By area:

Informal savings also remain low…

Source: ENAHO 2015

86%

14%

No Yes

95%

5%

No Yes

99%

1%

No Yes

People over the age of 18: Do they save by savings board?

People over the age of 18: Do they save at home?

People over the age of 18: Do they save with their families?

…and heterogeneous

Source: ENAHO 2015

People aged over 18 who saved or lent, 2015 (%) People aged over 18 who have access to the formal financial system, 2015 (%)

LegendLegend

52% don’t save and don’t haveaccess to the financial system

Source: ENAHO 2015

Yes No Total

Yes 9% 13% 22%

No 26% 52% 78%

Total 35% 65% 100%

In the last 12 months, Have you saved or 

borrowed?

Do you have access to any bank, caja municipal  , caja rural   or microfinance institution?

Why are savings so low? (1)

Source: SBS

Scarce supply of financial services

Distribution of banking officesAugust 2016

Legend

Source: ENAHO 2015

In the current economic situation, Does your household ...?

Why are savings so low? (2)

13%

8%

12%67%

save money

spend its savings

borrow

balance its expenses andincome

Low savingcapacity

Source: ENAHO 2015

• Consumption patterns

• Commitment problems

• Trust

• Financial literacy

Why are savings so low? (3)

Perhaps saving capacity is not so low as peopledeclare

• Commitment problems, regarding consumption• Dasso and Fernandez (2004) analyzing pay dates and consumption among Juntos’ (the Peruvian CCT) beneficiaries– Food expenditures ↑ 10‐20% when benefit recipients have cash on their hands

– But the consumption of candies, chocolates, soft drinks and meals in restaurants goes especially high

• That money could have been saved…

What if savings facilities were as available as restaurants and grocery stores?

• Gertler et al. (2016) installed banking agents (MultiRed Agents) in 30 districts of the Provinces of Puno, Cusco, Apurímac, and Ayacucho in Peru and concurrently implemented education and trust workshops in a subset of them

Trust remains as a key issue• It takes some time to develop…• Bachas et al. (2017) working with data on four yeas of banking activity for 340 

000 beneficiaries of the Mexican CCT. • Debit cards rolled out to beneficiaries (benefits are already directly deposited 

into a savings account). • Prior to receiving a debit card, beneficiaries do not save in these accounts. • Beneficiaries then begin to increase their savings after 9 to 12 months with the 

card. – During the initial stagnant period, they use the card to check their balances frequently– The number of checks decreases over time as their reported trust in the bank increases. – After 1 to 2 years, the debit card causes the savings rate to increase by 3 to 5 percent of 

income. – This effect represents an increase in overall savings.

There are innovative tools to develop such trust: edutainment

• Soap operas are a powerful instrument: role models, identification, aspirations, simplicity of the messages...

• Already effective on fertility in Brazil (Chong et al., 2012)

• Chong and Valdivia (2017) tested soap operas as an instrument for financial inclusion among CCT beneficiaries in Huancavelica, Peru– A year later, women exposed to the treatment have an 

improved knowledge and attitude towards formal savings– No initial change in savings balances but it picked up later – The improved pro‐savings attitude remained latent for 

several months, until right about the time cash surpluses are likely, due to post‐harvest season. 

– Strong empowerment effect within the household, mainly for economic and financial decisions, and especially among the women under 40

Beyond medium‐to‐long term processes, frequentreminders are also effective

• Karlan et al. (2016) performed field experiments in Bolivia, Peru, and the Philippines among clients who recently opened commitment savings accounts

• Reminder messages increase commitment attainment• Messages that mention both savings goals and financial incentives proved particularly effective– Other content variations such as gain versus loss framing do not have significantly different effects. 

– Receiving additional late reminders has no additive effect. • (beyond hyperbolic preferences and commitment sophistication) These empirical results call for a model of limited attention

Thank you!@hugonopo