The Limits of Commitment: Who Benefits from Illiquid Savings Products?

Niklas Buehren, Markus Goldstein, Leora Klapper, Tricia Koroknay-Palicz and Simone Schaner

No 8633, Policy Research Working Paper Series from The World Bank

Abstract: Working with a private bank in Ghana, this study examines the impacts of a commitment savings product designed to help clients taking repeated overdrafts break their debt cycles. Overall, the product significantly increased savings with the bank without increasing overdrafts. However, after accounting for other sources of savings, the study finds that clients with above-median baseline overdraft histories do not accrue new savings during the commitment period. Rather, they draw down other savings to offset the committed amount and take on new debt. In contrast, individuals with below-median overdraft histories significantly increase savings during and after the commitment period.

Date: 2018-10-31
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