Paper

Door-to-Door Deposits as a Commitment to Savings? Evidence from a Field Experiment in the Philippines

Can the door-step deposit collection impact the savings behavior of the poor in the Philippines?
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This paper uses a randomized control trial to evaluate the impact of offering a deposit-collection service to the micro-savers of a rural bank in the Philippines. The paper details the following for the deposit collecting program:

  • Clients demand deposit collection services in part as a commitment to lowering future marginal cost of depositing cash;
  • Intra-household bargaining issues play a strong role in the take-up and use of deposit collection services.

The paper lists the findings and the financial impact of the service. There is:

  • A substantial increase in savings for those offered the service;
  • A slight decrease in borrowing for clients who were randomly offered the deposit collection service.

The paper further proceeds by detailing:

  • The experimental design and setting for the study;
  • The determinants of take-up of the deposit collection service.

The paper concludes with the following:

  • The expansion of lending mechanism through savings collectors will reduce the cost associated with individual-collector savings mechanism;
  • The shift to the formalization of deposit collecting may also be helpful in removing information asymmetries in lending markets;
  • There is a demand for savings vehicles that help individuals save when they otherwise do not;
  • There is still scope for learning about the behavioral responses these savings products invoke to understand:
    • What drives the decision to save?
    • How to best design savings products?
    • Who to target?

About this Publication

By Ashraf, N., Karlan, D. & Yin, W.
Published