Savings Framework (Dupas & Robinson - OSA)

Question 1

3 classes of saving

Answer 1

Saving up
Saving down
Saving through

Question 2

Saving up

And issue with this?

Answer 2

Savings accumulate into a big useful sum

Many people struggle to save (lack of bank account, behavioural etc)

Question 3

Saving down

Answer 3

Taking an advance (loan) and repaying through a series of savings

Question 4

Saving through, and main example!

Answer 4

Saving on a regular basis which is swapped for a lump sum at some time.

(ROSCAS, insurance scheme!)

Question 5

Dupas and Robinson:

What was the setting and sample and design?

Answer 5

Looks at impact of an open savings account

Setting: Kenya - market vendors

Design:
Account pays 0 nominal interest, with withdrawal fees, banks only open weekdays. (So no gains on saving, but better than saving at home?)

Question 6

Results: was saving account useful?

How much did daily investment and private expenditure increase by? (For treated group)

Answer 6

Yes! Despite negative nominal returns, used heavily. The features removed temptation to spend.

Treatment groups daily investment increased by 40/50%.

Private expenditures increased by about 40%

Question 7

So why save when the returns are negative? (5)

Answer 7

Lumpy investments - so needed to save a lot.

Returns to investment varied overtime

Business investment reversible only at a cost

Behavioural constraints in saving at home!

Safety - cover for emergencies (mentioned in previous section)