Facilitating Savings for Agriculture: Field Experimental Evidence from Malawi
Previously titled "Commitments to Save: A Field Experiment in Rural Malawi." We thank Niall Keleher, Lutamyo Mwamlima and the IPA staff in Malawi; Steve Mgwadira, Mathews Kapelemera, and Webster Mbekeani of OBM; and the OBM management and staff of Kasungu, Mponela and Lilongwe branches. Matt Basilico and Britni Must provided excellent research assistance. We are grateful to Beatriz Armendariz, ABSTRACT We implemented a randomized intervention among Malawian farmers aimed at facilitating formal
... acilitating formal savings for agricultural inputs. Treated farmers were offered the opportunity to have their cash crop harvest proceeds deposited directly into new bank accounts in their own names, while farmers in the control group were paid harvest proceeds in cash (the status quo). The treatment led to higher savings in the months immediately prior to the next agricultural planting season, and raised agricultural input usage in that season. We also find positive treatment effects on subsequent crop sale proceeds and household expenditures. Because the treatment effect on savings was only a small fraction of the treatment effect on the value of agricultural inputs, mechanisms other than alleviation of savings constraints per se are needed to explain the treatment's impact on input utilization. We discuss other possible mechanisms through which treatment effects may have operated. 12 If decisions had been made the day that tobacco sales were transferred to OBM then the allocations into the commitment accounts by present-biased individuals would have been lower. 13 Prior to randomization, treatment clubs were stratified by location, tobacco type (burley, flue-cured or dark-fire) and week of scheduled interview. The stratification of treatment assignment resulted in 19 distinct location/tobacco-type/week stratification cells. Does changing behavioral intentions engender behavior change? A meta-analysis of the experimental evidence', Psychological Bulletin 132(2), 249-268. World Bank (2008) , World Development Report: Agriculture for Development, Washington D.C. Zwane, A. P.; Zinman, J.; Van Dusen, E.; Pariente, W.; Null, C.; Miguel, E.; Kremer, M.; Karlan, D. S.; Hornbeck, R.; Giné, X.; Duflo, E.; Devoto, F.; Crepon, B. & Banerjee, A. (2011), "Being surveyed can change later behavior and related parameter estimates,"