Coauthor(s): Arun Chandrasekhar.
We conduct a field experiment to explore two interventions to help individuals increase their savings balances. First, we design a financial product based on the business correspondents model, which includes frequent reminders, assistance in account opening, and the setting of a six-month savings goal. Second, to this bundle we also add a peer monitoring component to test whether existing local institutions can help to increase the penetration of the formal banking system. Specifically, some savers in our experiment are assigned (or choose) monitors from their community who are made aware on a regular basis of the saver's progress towards his/her goal. We ask whether having a monitor substitutes for a formal commitment device and, moreover, whether some community members are better than others at encouraging responsible financial behavior. We find that individuals are much more successful at reaching their goals when they are assigned to a monitoring treatment. We also find that savers with randomly assigned monitors reach their goals more frequently than savers who chose their monitors.
Breza, Emily, and Arun Chandrasekhar. "Savings Monitors." Columbia Business School, 2013.