Abstract

http://ssrn.com/abstract=1374078
 
 

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Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?


Shawn Allen Cole


Harvard Business School

Thomas Sampson


Harvard University

Bilal Zia


World Bank - Development Research Group (DECRG)

October 12, 2010

Journal of Finance, Forthcoming
Harvard Business School Finance Working Paper No. 09-117

Abstract:     
Financial development is critical for growth, but its micro-determinants are not well understood. We test leading theories of low demand for financial services in emerging markets, combining novel survey evidence from Indonesia and India with a field experiment. We find a strong correlation between financial literacy and behavior. However, a financial education program has modest effects, increasing demand for bank accounts only for those with low levels of education or financial literacy. In contrast, small subsidies greatly increase demand. A follow-up survey confirms these findings, demonstrating the newly opened accounts remain open and in use two years after the intervention.

Number of Pages in PDF File: 122

Keywords: Banking and finance, financial institutions, field experiments, India, Indonesia, economic development, consumer finance, financial education

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Date posted: April 9, 2009 ; Last revised: October 14, 2010

Suggested Citation

Cole, Shawn Allen and Sampson, Thomas and Zia, Bilal, Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets? (October 12, 2010). Journal of Finance, Forthcoming; Harvard Business School Finance Working Paper No. 09-117. Available at SSRN: http://ssrn.com/abstract=1374078

Contact Information

Shawn Allen Cole (Contact Author)
Harvard Business School ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
Thomas Sampson
Harvard University ( email )
1875 Cambridge Street
Cambridge, MA 02138
United States
Bilal Zia
World Bank - Development Research Group (DECRG) ( email )
MC3-445
1818 H Street, N.W.
Washington, DC 20433
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