The Cost of Convenience? Transaction Costs, Bargaining Power, and Savings Account Use in Kenya

This paper studies the impact of reducing bank account transaction costs via ATM cards in a developing country. The ATM card reduced withdrawal fees by over 50% (from USD 0.78 to USD 0.38), enabled account holders to make withdrawals from their accounts at any time of the day, and enabled accounts to be accessed without the in-person verification of a national identity card. Targeting ATM cards to joint accounts and accounts owned by men substantially increased savings rates (by 40%) and average daily balances (by 16%) in the bank accounts.

In contrast, the intervention had an insignificant (but negative-signed) impact on account use and savings when targeted to individual accounts owned by women. This gender difference appears to be driven at least in part by differences in bargaining power within the household: the positive treatment effect for men is concentrated in households where men score above-median on a demographic proxy of bargaining power, whereas the negative treatment effect for women is concentrated in households where women score below-median on the bargaining power measure. Simply accounting for differences in bargaining power reduces the gender gap in treatment effects by 77%.