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• Other Unpublished Work | 2013

  Saving More to Borrow Less: Evidence from Randomized Access to Formal Savings Accounts in Chile

  Felipe Kast and Dina D. Pomeranz

  Poverty is often characterized not only by low average income, but also by highly variable income and expenditures, and a lack of access to insurance services that can help smooth consumption. We investigate whether access to a formal savings account can provide a vehicle for self-insurance, by allowing participants to build a buffer stock of precautionary savings. In a randomized field experiment in Chile, about 3000 low-income micro-entrepreneurs are provided access to a formal savings account with no minimum balance or maintenance fees. Evaluating the impact after one year, we find that access to such accounts helps participants alleviate the burden of economic shocks, both objectively and subjectively. Participants with access to a savings account have less informal debt, fewer outstanding payments, and less often need to reduce consumption due to economic difficulties. Subjectively, they report being less worried about their financial future, and evaluate their recent economic situation as less severe. We therefore conclude that formal savings accounts can be an effective vehicle to provide a means for consumption smoothing in contexts where many other forms of insurance are lacking.

  Keywords: Income Characteristics; Borrowing and Debt; Personal Finance; Saving; Spending; Consumer Behavior; Poverty; Chile;

  Citation:

  Kast, Felipe, and Dina D. Pomeranz. "Saving More to Borrow Less: Evidence from Randomized Access to Formal Savings Accounts in Chile." 2013.

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• Case | HBS Case Collection | 2012 (Revised from original 2007 version)

  Parmalat Uruguay (A)

  Paul Marshall and Gustavo Herrero

  Three young MBAs create a partnership to acquire the assets of Parmalat in Uruguay. Focuses on their analysis prior to submitting a bid and their plan for improving the operations once their bid is accepted. In addition to improving operations, they must negotiate with creditors to reduce the debt burden on the company.

  Keywords: Mergers and Acquisitions; Restructuring; Entrepreneurship; Borrowing and Debt; Negotiation; Performance Improvement; Uruguay;

  Citation:

  Marshall, Paul, and Gustavo Herrero. "Parmalat Uruguay (A)." Harvard Business School Case 807-103, November 2012. (Revised from original March 2007 version.)

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• Teaching Note | HBS Case Collection | 2012 (Revised from original 2012 version)

  Chuck's Wagon Inc. (TN)

  Paul W. Marshall and Jim Sharpe

  Citation:

  Marshall, Paul W., and Jim Sharpe. "Chuck's Wagon Inc. (TN)." Harvard Business School Teaching Note 812-059, November 2012. (Revised from original April 2012 version.)

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