Experience in financial decision-making: Field evidence from Malawi

Xavier Gine and Jessica Goldberg

Journal of Development Economics, 2023, vol. 161, issue C

Abstract: Fifty-three percent of subjects who owned a high-fee account with a local bank in Malawi did not switch to a new, lower-fee account when given the choice. In contrast, holders of high-fee accounts who had been induced to make more transactions in the past were significantly more likely to adopt the new, cheaper account. Using estimates from a structural model, we find that the different propensity to switch is better explained by differences in the valuation of the new account rather than differences in the cost of switching. Experience using financial products can thus improve financial decision making.

Keywords: Savings; Field experiment; Experience (search for similar items in EconPapers)
JEL-codes: C93 D14 D91 G21 O16 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:161:y:2023:i:c:s030438782200178x

DOI: 10.1016/j.jdeveco.2022.103036

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