More from these Authors

• Other Unpublished Work | 2013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.

  CiteView Details

  Related

• Case | HBS Case Collection | 2012 (Revised from original 1997 version)

  Jim Sharpe: Extrusion Technology, Inc. (A)

  H. Kent Bowen and Barbara Feinberg

  Jim Sharpe, 11 years after receiving his MBA from Harvard and working for others, has finally become his own boss and 100% owner of manufacturer of aluminum extrusions. After 10 months of an unfunded search, he acquires the business in an LBO and prepares to face his employees on the first day.

  Keywords: crisis management; Acquisitions; Search Funds; entrepreneurial management; entrepreneurs; entrepreneurship; turnarounds; bank loan; leveraged buyouts; manufacturing; metals processing; entrepreneurial finance; Labor unions; Experience and Expertise; Corporate Entrepreneurship; Personal Development and Career;

  Citation:

  Bowen, H. Kent, and Barbara Feinberg. "Jim Sharpe: Extrusion Technology, Inc. (A)." Harvard Business School Case 697-078, December 2012. (Revised from original February 1997 version.)

  CiteView DetailsPurchase

  Related

• Case | HBS Case Collection | 2012 (Revised from original 2002 version)

  Jim Sharpe: Extrusion Technology, Inc. (Abridged)

  H. Kent Bowen

  Jim Sharpe, 11 years after receiving his MBA from Harvard and working for others, has finally become his own boss and 100% owner of manufacturer of aluminum extrusions. After 10 months of an unfunded search, he acquires the business in an LBO and prepares to face his employees on the first day.

  Keywords: Business Model; Change Management; Entrepreneurship; Borrowing and Debt; Banks and Banking; Personal Development and Career; Manufacturing Industry; United States;

  Citation:

  Bowen, H. Kent. "Jim Sharpe: Extrusion Technology, Inc. (Abridged)." Harvard Business School Case 603-084, December 2012. (Revised from original December 2002 version.)

  CiteView DetailsPurchase

  Related