Impact evaluation of the pilot program for the promotion of a savings culture
Given the previous background, starting in 2009 the Pilot Program for the Promotion of Savings Culture (PPCA, for its initials in Spanish) was implemented, aiming to deepen the bancarization and financial inclusion process, establishing the latter as an additional mechanism to fight extreme poverty. The main objectives of the pilot program were the following: 1) increase savings for families in poverty conditions, 2) replace informal saving plans into formal savings in the proper financial channels, 3) facilitate financial transactions through safe and efficient methods, and 4) as a result of the previous three objectives, help reduce poverty in beneficiary families by creating a buffer to withstand unexpected income shocks and smooth household consumption (ECSEI, 2010).
PPCA has two primary components: first, financial education so that household mothers can acquire basic savings knowledge, seeking to induce a behavioral change within the family in this regard; and second, a financial incentive that is given as random lottery for those beneficiary families that have their Banco Agrariosavings account open and active. At this point it is important to mention that the municipalities that participated in the pilot were divided into three groups: 1) those treated only with financial education; 2) those treated only with financial incentives; and 3) those subject to both treatments.
The main results of the qualitative analysis show that families use savings as a mechanism to smooth consumption and face unexpected shocks, despite all of the shortcomings that make achieving this objective a harder task; focal group testimonies indicate that consumption smoothing is achieved easier if there is a clear goal in mind.
On the other hand, the quantitative analysis shows that the PPCA has a positive effect on formal savings of the treated families, especially for those families that received financial education and the families that received both treatments. Additionally, the evidence shows that there is a positive effect on the beneficiary families’ savings accounts balance, except for those families that only received the financial incentive treatment.