The impacts of receiving a digital cash transfer on financial deepening: Evidence from Daviplata

Laura G. Amado Morales (lg.amado@uniandes.edu.co)
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Laura G. Amado Morales: Universidad de los Andes

No 21195, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: During the Covid-19 pandemic, the Colombian government established the use of Digital Cash Transfers as a way to mitigate the impact of the economic crisis on the most poor and vulnerable of the Colombian population. Using data from Daviplata, one of the channels the government used to deliver the Digital Cash Transfers, I examine the effect that receiving these transfers had on financial deepening. My findings suggest that receiving a cash transfer via Daviplata increased financial deepening, through an increase in savings and an increase in the average number of transactions made by the user. However, this financial deepening did not translate into the access to a broader portfolio of financial products and services. Following an Difference-in-Differences Event Studies approach, I find that receiving a Digital Cash Transfer (DCT) had an effect on increasing savings in $24,309, a quite large effect compared to average monthly savings for the targeted population. In terms of transactions, receiving a DCT via Daviplata had an effect of 0.1362, which represents an increase of about 20% compared to the number of average transactions made by the users.

Keywords: Financial Inclusion; Financial Deepening; Cash Transfers; Digital Financial Institutions; Savings Behavior. (search for similar items in EconPapers)
JEL-codes: G21 H53 I38 O16 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2024-09-25
New Economics Papers: this item is included in nep-ban, nep-fle, nep-ipr and nep-pay
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