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• Other Unpublished Work | 2013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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• Supplement | HBS Case Collection | 2013 (Revised from original 2011 version)

  Felipe Calderón: Leading with Light and Power (C)

  J. Bruce Harreld and David Lane

  This sequence of cases explores how leaders get their team focused on framing, analyzing, and ultimately acting upon complex decisions. The A case provides an inside look as President of Mexico, Felipe Calderon, works with his cabinet ministers to decide how to turnaround a corrupt, highly unionized, and poorly managed state-owned company which distributes electrical energy to Mexico City and the surrounding environs. While previous administrations over several decades were aware of the problem, none wanted to risk the political or economic consequences of prolonged strikes and power outages in one of the world's most populous cities. Yet, it is now clear that the company's poor financial performance and corruption are causing significant harm to Mexico. A central theme is the president's role in making sure his team has done its homework and is fully prepared to make the appropriate decision. The B case, to be handed out during class, provides the actual decision criteria used. The C case, to be handed out at the end of class, describes what the team ultimately decided and how they executed it.

  Keywords: Management Analysis, Tools, and Techniques; Decision Choices and Conditions; Cases; Leadership Style; Crime and Corruption; State Ownership; Problems and Challenges; Risk and Uncertainty; Economics; Finance; Performance; Management Teams; Energy Industry; Mexico City;

  Citation:

  Harreld, J. Bruce, and David Lane. "Felipe Calderón: Leading with Light and Power (C)." Harvard Business School Supplement 811-094, January 2013. (Revised from original April 2011 version.)

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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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