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• Other Unpublished Work | 2013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 | 2013 (Revised from original 2010 version)

  Cresud S.A., Farmer or Real Estate Developer?

  Ray Goldberg, Arthur I Segel, Gustavo Herrero and Andrew Terris

  Alejandro Elsztain, CEO of Cresud S.A., is faced with the difficult choice of whether to sell, develop, or continue to hold the 151,000 hectares of remaining undeveloped farmland at the company's Los Pozos farm in Argentina. Developing the land will further expose Cresud to a variety of risks related to owning and operating farmland, but the potential financial rewards are potentially significant. As competition has increased and farmland values have skyrocketed in the last eight years, Cresud's overall corporate strategy has been to increasingly focus on development opportunities outside of the country—in areas such as Brazil, Paraguay, and Bolivia. Alejandro's looming decision on Los Pozos is, in many ways, reflective of choices facing his company in general.

  Keywords: Agribusiness; Investment; Investment Portfolio; Risk Management; Ownership Stake; Property; Agriculture and Agribusiness Industry; Real Estate Industry; Argentina;

  Citation:

  Goldberg, Ray, Arthur I Segel, Gustavo Herrero, and Andrew Terris. "Cresud S.A., Farmer or Real Estate Developer?" Harvard Business School Case 211-011, February 2013. (Revised from original November 2010 version.)

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

  Doing Business in Brazil

  Aldo Musacchio, Gustavo A. Herrero, Ricardo Reisen de Pinho and Cintra Scott

  This case deals with a decision that must be made by a U.S. private equity firm of whether to enter Brazil, one of the most attractive rising countries in the world, pondering the risks and opportunities that characterize it.

  Keywords: emerging market finance; emergent countries; strategy; business history; Economic History; Emerging Markets; Business Ventures; Strategy; Brazil;

  Citation:

  Musacchio, Aldo, Gustavo A. Herrero, Ricardo Reisen de Pinho, and Cintra Scott. "Doing Business in Brazil." Harvard Business School Case 713-426, December 2012. (Revised from original September 2012 version.)

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