Mukherjee, S. W., Bergquist, L. F., Burke, M., & Miguel, E. (2024). Unlocking the benefits of credit through saving. Journal of Development Economics, 171, 103346.

Access to microcredit has been shown to generate only modest average benefits for recipient households. We study whether other financial market frictions – in particular, lack of access to a safe place to save – might limit credit’s benefits. Working with Kenyan farmers, we cross-randomize access to a simple savings product with a harvest-time loan. Among loan offer recipients, the additional offer of a savings lockbox increased farm investment by 11% and household consumption by 7%. Results suggest that financial market frictions can interact in important ways and that multifaceted financial access programs might unlock dynamic household gains.

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