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• Other Unpublished Work | 2013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 2012 version)

  Paul Thomson: Walker Insurance

  Michael Roberts, Jim Sharpe and Sonia Nagala Change

  Having just acquired Walker Insurance, Paul Thomson finds himself short of funds to support his original turnaround plan. He can request additional cash from his investor group, hunker down and grow at a slower rate or consider a proposal to buy his business. He has taken steps to re-virtualize the company and is challenged to build a salesforce to grow the business.

  Keywords: crisis management; Acquisitions; Search Funds; entrepreneurial management; entrepreneurs; entrepreneurship; Insurance; turnarounds; boards of directors; sales force management; Entrepreneurship; Insurance Industry; Florida;

  Citation:

  Roberts, Michael, Jim Sharpe, and Sonia Nagala Change. "Paul Thomson: Walker Insurance." Harvard Business School Case 813-057, April 2013. (Revised from original August 2012 version.)

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• Case | HBS Case Collection | 2013

  Elasto Therm: The Next Step

  Jim Sharpe and James Weber

  Julia and Nate Burstein were living their dream running their own business and balancing the demands between their work and family obligations while creating a company that was responsive to their employees’ and their customers’ needs. The Bursteins had joined a large multinational manufacturing company after receiving their MBAs from HBS, but soon left to join Julia's family plastics business. After the business was sold, they struck out on their own to search for a similar business. They purchased Elasto Therm, with $8 million in revenue from manufactured rubber and urethane components, with their own cash, bank financing, and the seller, partly in the form of an employee stock ownership plan (ESOP). Initially, Nate ran the business and after a few years changed roles with Julia to stay at home with their young children for three years. The two were in charge as co-CEOs before Julia relinquished her responsibilities to be at home again. The couple significantly strengthened the organization's talent, focused on innovation, growth, and provided a learning environment for their employees. Through cost efficiencies and pricing strategies, Elasto Therm was able to achieve higher margins than their competitors and focused on low-volume, short-run orders as they continued to expand the business. The 2008 recession forced them to reexamine all aspects of the business, and it retained profitability after painful cutbacks in the organization. To continue their growth into the next decade, they are faced with the choice of acquiring other businesses or growing more organically by adding to their sales organization to achieve geographic expansion.

  Keywords: entrepreneurial management; entrepreneurs; entrepreneurship; pricing; Pricing policies; Pricing strategy; pricing structure; sales force management; Acquisitions; work/family balance; work-life balance; Family-owned business; Entrepreneurship; Growth and Development Strategy; Expansion; Work-Life Balance; Manufacturing Industry; Rubber Industry; United States;

  Citation:

  Sharpe, Jim, and James Weber. "Elasto Therm: The Next Step." Harvard Business School Case 813-030, February 2013.

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