Description:

Cynthia Kinnan, Economics was awarded an EDGS Faculty Research Grant

Financial inclusion is increasing in developing countries, as more households adopt financial products. An open question is how adopters’ decisions will affect non-adopters in their social networks: both crowding out and crowding in of informal risk sharing are possible. Effects may differ for households connected by altruism (“I want to share”) vs. by obligation (“I have to share”). We carried out a targeted savings intervention to analyze these dynamics in peri-urban Zanzibar. We use baseline survey data to understand which households tend to be named as altruistic vs obligatory ties. We next examine social network statistics, baseline financial inclusion and other characteristics as determinants of savings account adoption. Finally, we use propensity score matching techniques to study the effects of savings account adoption on adopters’ altruistic and obligatory social ties in terms of transfers, consumption, income and subjective wellbeing.