banking on trust - world...
TRANSCRIPT
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BankingonTrust:HowDebitCardsHelpthePoorSaveMore
PaulGertler,UCBerkeley
WithPierreBachas,,SeanHigginsandEnriqueSeira
WorldBankJune2016
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Trust"Virtuallyeverycommercialtransactionhaswithinitselfanelementoftrust....[and]muchoftheeconomicbackwardnessintheworldcanbeexplainedbythelackofmutualconfidence."
--KennethArrow(1972)
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Trust"Virtuallyeverycommercialtransactionhaswithinitselfanelementoftrust....[and]muchoftheeconomicbackwardnessintheworldcanbeexplainedbythelackofmutualconfidence."
--KennethArrow(1972)
q Importantwhenexchangemoneyforpromises
q Essentialwherelegal institutionsthatenforcementofcontractsisweak
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Lowtrustinbanks:aworldwidephenomenon
Source:WorldValuesSurvey
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LowtrustinbanksinMexico
q FinancialCrises• 1995-96• 2008-09
q HighProfileBankFraud• 1338newspaperstorieson
bankfraudin2014-15• “HowtoSaveforYour
GraduationandAvoidFraud”• “RetirementSavingsAccounts
withMinimalRiskofFraud.”
q Worriedabout• Hiddenfees• Outrightfraud
Source:WorldValuesSurvey
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LowTrustAssociatedwithLowUseofBanks
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DebitCards&MobileMoneyq Trustnotinnatecharacteristic,
butinfluencedbyexperienceandinformation
qMobilemoney&debitcards§ Lowertransactionscostsfor
accesstofunds§ Alsolowercostofmonitoring(
checking)balances§ Monitorforfraud&buildtrust
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ExamineEffectofDebitCardsonTrustandSavingsinOPORTUNIDADES• Conditionalcashtransferprogram• Programreaches6millionfamilies(20%ofMexico)
• In2005Transferdepositeddirectlyintoasavingsaccount• Paideverybimester ($150average)• Nodebitcards
• In2009,Attacheddebitcardstoaccounts
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TimingofRoll-outandBankAccountData
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AdministrativeBankAccountDataOver340,000Bansefibankaccounts◦ UrbanOportunidadesrecipients
Averagebalanceofeachaccounteachbimester
Fouryears:Nov-Dec2007toSep-Oct2011
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UseofAccounts:WithdrawalsperBimester
• Thisleadstoa“mechanicaleffect”onaccountbalances• Wecalculatemechanicaleffectattheaccount-bimesterlevel• Subtractitfromaveragebalancetogetnetbalance
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• SinceFEwithlaggeddependentvariablebiased(Nickell,1981),estimateusingsystemGMM(BlundellandBond,1998)• SEsclusteredbybranchwithWindmeijer(2005)finitesamplecorrection
EffectonMarginalPropensitytosave
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Whatexplainsdelayedeffectovertime?
Learningtousetechnology(ATM,debitcard)
Fearthatsavingswillleadtobeingdroppedfromprogram
Buildingtrustinfinancialinstitutions
Analyses:◦ Twosurveysdesignedtoevaluatethechangetodebitcards
◦ Administrativedataonaccountbalancechecks
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Testingtrustvs.learning
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Testingtrustvs.learning
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Buildingtrustthroughbalancechecks• Sameresultinadministrativedata
• Balancechecksdecreaseovertimewithcard
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Increaseinoverallsavingsorsubstitution?EvidencefromHouseholdSurveys
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• FromMPSspecificationusingadminaccountdata,after1yearsavingsincreaseby5.4%ofincome
• Fromhouseholdsurveydata,savingsincrease4.8%ofincome
IncreaseinOverallSavings(BackofEnvelope)
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DoesMoneyBurnaHoleinYourPocket?
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Conclusions• Trustinbanks1 reasonpoordonotusefinancialinstitutions
• Debitcards(mobilemoney)• Reducecostofaccessingsavings• butalsoreducecostofmonitoring• Buildtrustandtherebysavings
• SavingsinBanksmayhelpdealwithproblemsassociatedwithinformalsavings
• Policies• Depositinsurance&Hotlinehelp• Trusttrainingpartoffinancialliteracyprograms
• Cashtransferprogramsofferseasywaytotargetthepoorthrough“opt-out”strategies•Mayneed“trustTraining”tobeeffective