Formal finance and informal safety nets of the poor: Evidence from a savings field experiment

Using a field experiment on financial service information delivery in over 320 villages in Malawi, I find that formal savings increases agricultural investments and crop income, and raises private transfers to other households during the hungry season. Households with higher education adopt accounts and experience rises in savings and income, while low education households do not. However, the benefits to adopters are used to help insure the rest of the village – in contrast to suggestions elsewhere in the literature that savings may negatively impact sharing through networks. Non-savers experience large rises in transfer receipts, improved food consumption, and better health. The worst-off households experience particularly strong increases in informal aid. Findings show financial markets expansion has immediate effects beyond service-users, with large and surprising impacts on informal support systems. Results also support the effectiveness of a novel method to spur service uptake and accelerate financial deepening.