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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Saving more to borrow less: experimentalevidence from access to formal savings accounts in Chile
Organization Unit
  • Felipe Kast
  • Dina Pomeranz
  • English
Institution National Bureau of Economic Research
Series Name NBER working paper series
Number 20239
Number of Pages 50
Date 2014
Abstract Text Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that reducing barriers to saving through access to free savings accounts decreases participants' short-term debt by about 20%. In addition, participants who experience an economic shock have less need to reduce consumption, and subjective well-being improves significantly. Precautionary savings and credit therefore act as substitutes in providing self-insurance, and participants prefer borrowing less when a free formal savings account is available. Take-up patterns suggest that requests by others for participants to share their resources may be a key obstacle to saving.
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Additional Information Auch erschienen als Harvard Business School Working Paper No. 14-001: