Savings Defaults and Payment Delays for Cash Transfers : Field Experimental Evidence from Malawi
Financial products and transfer schemes are often designed to help individuals improve welfare by following through on intertemporal plans. This paper implements an artefactual field experiment in Malawi to test the ability of households to manage...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/08/26741210/savings-defaults-payment-delays-cash-transfers-field-experimental-evidence-malawi http://hdl.handle.net/10986/25052 |
| Summary: | Financial products and transfer schemes
are often designed to help individuals improve welfare by
following through on intertemporal plans. This paper
implements an artefactual field experiment in Malawi to test
the ability of households to manage a cash windfall. This
study varies whether 474 households receive a payment in
cash or through direct deposit into pre-established accounts
at a local bank. Payments are made immediately, with one day
delay, or with eight days delay. Defaulting the payments
into savings accounts leads to higher bank account balances,
an effect that persists for several weeks. However, neither
savings defaults nor payment delays affect the amount or
composition of spending, suggesting that households manage
cash effectively without the use of formal financial products. |
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