What are the key barriers to savings in rural areas of developing countries? In particular, what is the relative importance of access to banking services, transaction costs, self-control problems, and sharing norms in explaining low savings levels? If barriers to savings can be reduced or eliminated, what would the impact of enhanced savings be on agricultural input use, farm output, human capital (educational and health) investments, and overall well-being in rural households?

IPA will work with Opportunity International Bank of Malawi (OIBM) to assist tobacco farmers in opening personal bank accounts. Farmers are divided using random assignment among seven different interventions. Allocation into treatment conditions is done at the club level to facilitate training and service delivery. Aside from those in the control group, all farmers will be offered the opportunity to have their crop proceeds deposited directly into ordinary savings accounts. Some treatment groups are offered the opportunity to make deposits into regular savings accounts while others are encouraged to make deposits to commitment savings accounts.  Proceeds from tobacco sales are directly deposited into the personal savings account and commitment savings accounts. The method of account promotion (no raffle, public raffle, and private raffle) is also randomized.  In order to promote savings and capture the effects of social pressures to share savings, raffle offers are based on personal savings levels.

In partnership with local financial institutions that are expanding operations in rural areas, we will randomize offers of savings accounts to farm households, alongside randomization of complementary interventions intended to establish the relative importance of various barriers to savings. For example, to establish the importance of transaction costs, some farmers will be offered account-opening assistance as well as the option of having cash crop proceeds direct-deposited by a crop-purchasing organization. To establish the importance of self-control and/or sharing norms, some farmers will be offered "commitment" savings accounts that allow account holders to request that funds be frozen until a specified date (e.g., immediately prior to the planting season, so that funds are preserved for farm input purchases).