We study an expansion in social protection to middle-income households that also induced beneficiaries to open digital accounts to receive their benefits. Using a regression discontinuity design and credit-bureau data, we study the impacts of the program by baseline account ownership. Households without prior accounts were more likely to receive the transfers in digital accounts. For these households, the program reduced financial distress by reducing delinquent utility and retail debt, increasing income, and preventing spending cuts.Among households without traditional bank loans or accounts at baseline, the program modestly increased credit access. We find no impacts among households with preexisting accounts.
We experimentally study the impacts of providing phone-based assistance to open digital bank accounts and sign up for direct deposits to beneficiaries of a Colombian cash transfer program who continued to receive transfers in cash despite having the option to adopt direct deposits. The intervention increased the probability of receiving transfers via direct deposit by 7.1 percentage points, generating savings for the government and increasing the timely reception of transfers. Difficulties that the government faced in reaching these individuals and their high costs of adopting digital technologies contribute to the low take-up. Beneficiaries without a prior financial history were less responsive to the intervention, but had larger impacts on number of transfer payments received and on the probability of owning an active financial account. For this subgroup, switching to direct deposits improved access to loans from banks, albeit these results are estimated with less precision. These findings highlight the potential benefits and challenges of reaching the last mile of financial inclusion.
We study how public pensions impact lifecycle labor supply decisions. Our analysis centers on pension eligibility rules in Ecuador. We first use administrative data to document and unpack retirement spikes at eligibility ages. Next, we use survey data and regression discontinuity to investigate whether eligibility rules influence earlier-in-life decisions about when to work formally versus informally. We find discontinuous increases in transitions to formal employment at 50, consistent with forward-looking people timing employment to minimize social security contributions while maintaining benefit eligibility. Evidence suggests that small and family firms, where employees and employers may readily coordinate, help facilitate these transitions.
We study how expert forecasts about inflation and nominal exchange rates affect households' inflation perceptions, exchange-rate beliefs, and later durable-goods holdings in a small open economy. Using a randomized information experiment in Suriname, we provide households with expert forecasts about future inflation and depreciation. At baseline, households substantially underestimate both inflation and depreciation, and the information treatments generate large upward revisions in expectations. Linking the experiment to follow-up data two years later, we find lower ownership of tradable durable goods among households exposed to macroeconomic forecasts, particularly consumer electronics. Results suggest that households interpret macroeconomic forecasts as informative about broader economic conditions rather than only about relative prices.
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We study the effects of sectoral lending quotas in Bolivia, which required lenders to allocate a minimum share of their portfolios to priority sectors. Exploiting the timing of the reform and variation in pre-policy compliance at the lender and locality levels, we estimate impacts on credit markets and economic activity. To meet the quotas, lenders compressed their financial margins and expanded their branch networks, increasing their vulnerability to liquidity shocks. At the local level, the credit expansion raised household income by 7.8%, driven largely by self-employment in non-priority sectors - the very sectors the policy did not target. Our findings illustrate how directed credit regulations generate important tradeoffs and equilibrium consequences that extend well beyond their specific objectives.