The Effect of Financial Access on Networks: Evidence from a Field Experiment in Nepal∗

We study how social networks change due to an exogenous intervention, such as an expansion in financial access, and we show how to estimate the effect of these network changes on individual outcomes (intervention spillovers). We use a unique panel dataset that contains detailed information on the network of informal financial transactions before and after a field experiment that randomized access to savings accounts. First, we provide evidence that the intervention affected the network of informal financial transactions. Second, we propose a dynamic model of peer effects that accounts for the intervention spillovers and we show that, disregarding the intervention-driven network changes, leads to biased peer-effect estimates. JEL codes: D85; G21; O17