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Conditional Cash Transfers, Debit Cards and Financial Inclusion: Experimental Evidence from Argentina

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  • Cruces, Guillermo
Abstract
Cash transfer and other social protection programs in developing countries have often been accompanied by measures to foster financial inclusion, such as the adoption and use of bank accounts and electronic means of payments. Argentina's social benefits are paid in bank accounts and accessed through debit cards. With the simultaneous objective of fostering formality among beneficiaries and stores, the use of debit cards for purchases has been incentivized by means of additional subsidies. We studied the low take-up of these extra benefits by means of a field experiment involving 400,000 beneficiaries of Argentinas largest conditional cash-transfer program (with 2.2 million beneficiaries who are the parents of four million children, 40% of the countrys 0-17-year olds). By using their debit card to spend the allowance, rather than withdrawing cash from ATMs, they can receive a rebate of 15% of their expenditures. However, they systematically fail to claim this benefit: only about 25% of beneficiaries receive this transfer. Our experiment provided information about the effectiveness of an information campaign conducted via text messages or through on-screen messages at ATM machines. The campaign increased purchases with debit cards and subsequent rebates significantly but not substantially in the short run. However, beneficiaries who increased their use of debit cards do not exhibit a higher probability of having access to credit through the financial system, nor higher levels of formal employment. The results indicate that cultural factors (a preference for cash), administrative hassle and citizen security issues are relevant issues that limit the potential of financial inclusion through increased use of digital means of payment.

Suggested Citation

  • Cruces, Guillermo, 2023. "Conditional Cash Transfers, Debit Cards and Financial Inclusion: Experimental Evidence from Argentina," IDB Publications (Working Papers) 13034, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:13034
    DOI: http://dx.doi.org/10.18235/0005079
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    References listed on IDEAS

    as
    1. Michael Callen & Suresh de Mel & Craig McIntosh & Christopher Woodruff, 2019. "What Are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(6), pages 2491-2529.
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    6. Pierre Bachas & Paul Gertler & Sean Higgins & Enrique Seira, 2021. "How Debit Cards Enable the Poor to Save More," Journal of Finance, American Finance Association, vol. 76(4), pages 1913-1957, August.
    7. Callen, Michael & De Mel, Suresh & McIntosh, Craig & Woodruff, Christopher, 2019. "What are the headwaters of formal savings? Experimental evidence from Sri Lanka," LSE Research Online Documents on Economics 103022, London School of Economics and Political Science, LSE Library.
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    More about this item

    Keywords

    Take-up of social benefits; financial inclusion;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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