The Effects of Access to Mainstream Financial Services on the Poor: Evidence from Data on Recipients of Financial Education

I examine the causal effects of access to mainstream financial services, as provided by opening a bank account, on a sample of participants in financial education workshops. Exploiting quasi-random variation in the likelihood of account opening at specific institutions following the workshop, I find that account opening lowers delinquency and increases the likelihood of credit score improvement among previously unbanked participants. I find no effects on saving, self-reported overspending, and several measures of “financial wellbeing” such as finances-related stress. There appear to be important complimentarities between financial education and access to mainstream services: I present evidence suggesting that a minimal level of financial literacy is needed in order for account opening to induce participation in the mainstream credit system. I also find that opening an account increases self-reported literacy.