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