How Debit Cards Enable the Poor to Save More

Pierre Bachas, Paul Gertler, Sean Higgins*, Enrique Seira

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

14 Scopus citations


We study an at-scale natural experiment in which debit cards were given to cash transfer recipients who already had a bank account. Using administrative account data and household surveys, we find that beneficiaries accumulated a savings stock equal to 2% of annual income after two years with the card. The increase in formal savings represents an increase in overall savings, financed by a reduction in current consumption. There are two mechanisms. First, debit cards reduce transaction costs of accessing money. Second, they reduce monitoring costs, which led beneficiaries to check their account balances frequently and build trust in the bank.

Original languageEnglish (US)
Pages (from-to)1913-1957
Number of pages45
JournalJournal of Finance
Issue number4
StatePublished - Aug 2021

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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