Trust and Saving in Financial Institutions

Abstract

We randomly assigned beneficiaries of a conditional cash transfer program in Peru to attend a 3 hour training session designed to build their trust in financial institutions. We find that the intervention: (a) significantly increased trust in banks, but had no effect on financial literacy; (b) significantly increased savings over a ten month period, and (c) had no effect of the use of accounts for transactions. The increase in savings is a 1.6 percentage point increase in the savings rate out of the cash transfer depostis, and a 0.5 percentage point increase in the savings rate out of household income.