Facilitating savings for agriculture: Field experimental evidence from Malawi

Lasse Brune, Xavier Giné, Jessica Goldberg, Dean Yang

Research output: Contribution to journalReview articlepeer-review

88 Scopus citations

Abstract

Viewed as a policy intervention for increasing the use of agricultural inputs by households in developing countries, savings accounts have appealing features. Unlike subsidies, they do not require major government budget commitments. While the supply of credit for agricultural inputs is often constrained, banks are eager to attract new savings customers. The experiment among cash crop farm households in Malawi show that offering access to individual savings accounts not only increases banking transactions but also has statistically significant and economically meaningful effects on measures of household well-being, such as investments in inputs and subsequent agricultural yields, profits, and household expenditure. An important direction for future research would be to provide evidence on the mechanisms underlying the effects we found, since the treatment effects on input utilization are larger than can be explained by alleviation of savings constraints alone. Other mechanisms that might be explored include the role of savings as a buffer stock for self-insurance, increases in credit access, reductions in demands from others in the social network, as well as mechanisms suggested by behavioral economics.

Original languageEnglish (US)
Pages (from-to)187-220
Number of pages34
JournalEconomic Development and Cultural Change
Volume64
Issue number2
DOIs
StatePublished - Jan 2016
Externally publishedYes

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics

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