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

40 Pages Posted: 1 Nov 2018 Last revised: 2 Nov 2018

See all articles by Niklas Buehren

Niklas Buehren

World Bank

Markus Goldstein

World Bank

Leora Klapper

World Bank

Tricia Koroknay-Palicz

The World Bank

Simone Schaner

Center for Economic and Social Research (CESR)

Date Written: October 31, 2018

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.

Suggested Citation

Buehren, Niklas and Goldstein, Markus P. and Klapper, Leora and Koroknay-Palicz, Tricia and Schaner, Simone, The Limits of Commitment: Who Benefits from Illiquid Savings Products? (October 31, 2018). World Bank Policy Research Working Paper No. 8633, Available at SSRN: https://ssrn.com/abstract=3276437

Niklas Buehren (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Markus P. Goldstein

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Leora Klapper

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Tricia Koroknay-Palicz

The World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Simone Schaner

Center for Economic and Social Research (CESR) ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States

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