BREAD Working Paper No. 431, November 2014

What Are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka

Michael Callen, Suresh de Mel, Craig McIntosh, Christopher Woodruff


When households increase their deposits in formal bank savings accounts, what is the source of the money? We combine high-frequency surveys with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. In this context, the headwaters of formal savings are to be found in sacrificed leisure time: households work more and work more on the wage market when savings options improve. These results suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.

Keywords: savings, household decisionmaking, time use, high-frequency surveys

JEL classification codes: O16, D14, G21

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