Do basic savings accounts help the poor to save? Evidence from a eld experiment in Nepal

Recent studies have shown that the majority of the poor lack access to formal banking services of any kind and have emphasized the importance of enabling savings. Using a field experiment I investigate the impact of expanding household access to a savings account with no withdrawal fees on savings and borrowing behavior, assets accumulation, and investment in health and education. A savings account was randomly offered to poor female household heads through local bank-branches in 19 slums in Nepal. Results show that there is untapped demand for savings accounts and that the poor do save: 80% of the individuals offered the account opened one and used it actively, making on average 0.8 deposits per week, and saving about 8% of their weekly income. Access to the savings account increased monetary assets and total assets without causing any crowding out in other kind of assets or savings institutions. Impact is larger for households at the bottom and middle of the assets distribution and for the ones with no access to the financial system, formal or informal. Finally, financial access strongly increased households investment in health and education. JEL Codes: D14, O16, G21