Transnational Migrant Savings Control and Monitoring
Overseas migrants often hesitate to send excess savings to home-country relatives due to principal-agent problems and fear that funds will be misallocated or prematurely consumed.
Picture this
Imagine a worker who wants to save money back home, but knows any cash sent directly will be spent by relatives on non-essentials. Giving the worker a bank account where they retain sole or joint legal control allows them to deposit savings safely while maintaining oversight from afar.
What the evidence says
Enhancing migrant monitoring and direct ownership over origin-country savings accounts leads to statistically significant increases in total accumulated savings held in the home country.
- Who
- Transnational households of Salvadoran international migrants living in the United States and their origin-country families.
- How
- Randomized field experiment offering target savings accounts with varying degrees of sole versus joint migrant ownership and monitoring control (Ashraf et al. 2015).
What to do
Design cross-border financial products that grant overseas remittance senders direct legal control or joint monitoring over destination bank accounts.
From the source
"Ashraf et al (2015) find in a randomized study among migrants from El Salvador that improving monitoring and control over savings (by providing new types of savings accounts that allow migrant joint- or sole-ownership) leads to higher savings in the home country."
Financial Education and Financial Access for Transnational Households: Field Experimental Evidence from the Philippines
Tagged
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