81450 enGender Impact: The World Bank’s Gender Impact Evaluation Database Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets? Author(s) Shawn Cole, Thomas Sampson, Bilal Zia Contact bzia@worldbank.org Country Indonesia Organizing Theme Economic Opportunities and Access to Assets Status Completed Intervention Category Training Sector Finance and Private Sector Development Financial development is critical for growth, but its micro determinants are not well understood. We test leading theories of low demand for financial services in emerging markets, combining novel survey evidence from Indonesia and India with a field experiment. We find a strong correlation between financial literacy and behavior. However, Abstract a financial education program has modest effects, increasing demand for bank accounts only for those with limited education or financial literacy. In contrast, small subsidies greatly increase demand. A follow-up survey confirms these findings, demonstrating that newly opened accounts remain open and in use 2 years after the intervention. Gender Connection Gender Informed Analysis Gender Outcomes Gender disaggregated access to credit, savings IE Design Randomized Control Trial The intervention offers a financial education program on bank accounts randomly to half Intervention of 564 unbanked household. Orthogonal to this treatment, individuals are randomly offered small subsidies, ranging from $3 to $14 for opening a bank account. Intervention Period 2008; the training lasted 2 hours The experiment took place in 64 villages. 30 households were sampled from each survey village. Out of the 1920 households sampled 1173 did not have a bank account at the time. Each of the unbanked were offered to participate in the experiment. 23 households had to Sample population be dropped from the experiment due to collusion. The final sample was 1230 households, 736 of which did not have a bank account. 564 of these households participate in the experiment. There were two interventions randomly given to participants leading to 4 treatment groups: Comparison conditions training and incentive, no training and incentive, training no incentive, and a control of no training and no incentive. Unit of analysis Household Level Evaluation Period 2008-2010; the study follows up 2 years after the intervention Last updated: 14 August 2013 1 enGender Impact: The World Bank’s Gender Impact Evaluation Database Financial literacy training has no impact on the probability of opening a bank account, although it does have an impact among those with low levels of education and financial literacy. Modest financial subsidies have large significant impacts on the share of Results households who open a bank account, and larger subsidies have a much larger impact. A change from $3 to $14 led to a 7.6% increase in the probability of owning a bank account. The results hold 2 years after a study. Some of the survey team colluded with participants in the study so a large part of the Primary study limitations sample had to be dropped. Funding Source World Bank, HBS Division of Research and Faculty Development Cole, S., Sampson, T., & Zia, B. (2011). Prices or knowledge? What drives demand for Reference(s) financial services in emerging markets?. The journal of finance, 66(6), 1933-1967. Link to Studies http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.2011.01696.x/full Microdata Last updated: 14 August 2013 2