Commitments to Save : A Field Experiment in Rural Malawi

Abstract

This paper reports the results of a
 field experiment that randomly assigned smallholder cash
 crop farmers formal savings accounts. In collaboration with
 a microfinance institution in Malawi, the authors tested two
 primary treatments, offering either: 1) "ordinary"
 accounts, or 2) both ordinary and "commitment"
 accounts. Commitment accounts allowed customers to restrict
 access to their own funds until a future date of their
 choosing. A control group was not offered any account but
 was tracked alongside the treatment groups. Only the
 commitment treatment had statistically significant effects
 on subsequent outcomes. The effects were positive and large
 on deposits and withdrawals immediately prior to the next
 planting season, agricultural input use in that planting,
 crop sales from the subsequent harvest, and household
 expenditures in the period after harvest. Across the set of
 key outcomes, the commitment savings treatment had larger
 effects than the ordinary savings treatment. Additional
 evidence suggests that the positive impacts of commitment
 derive from keeping funds from being shared with one's
 social network.