Bank Accounts for the Unbanked: Evidence from a Big Bang Experiment

We provide empirical evidence from India’s PMJDY program, a “big bang” supply shock that gives bank accounts to virtually all of its 280 million unbanked. Proprietary data from individual bank account statements shows that there is significant uptake, usage, usage growth, and balance accumulation in PMJDY accounts. Activity levels increase over time and converge towards those in non-PMJDY accounts although PMJDY account holders are poorer, unfamiliar with banking, and undergo no literacy training. The results suggest that the 2 billion unbanked around the world have unmet demand for banking or that banking supply can stimulate its own demand.

Keywords: financial inclusion, household finance, savings, financial literacy, bank accounts

JEL Classification: G21, D14, O16

Suggested Citation: Suggested Citation

Chopra, Yakshup and Prabhala, Nagpurnanand and Tantri, Prasanna L., Bank Accounts for the Unbanked: Evidence from a Big Bang Experiment (May 2, 2017). Robert H. Smith School Research Paper No. RHS 2919091, Indian School of Business WP 2191091, Available at SSRN: https://ssrn.com/abstract=2919091 or http://dx.doi.org/10.2139/ssrn.2919091