Who is the Customer? Identifying the Initial Adopters of Formal Savings. Field Evidence from Malawi

This thesis examines household characteristics as determinants of formal savings accounts in rural Malawi. The main questions answered in this paper include the effects of household characteristics on the probability of having formal savings, the amounts saved in these accounts, and the probability of adopting formal savings. The central discussion aims to identify the initial adopters of formal savings accounts, using a marketing approach previously unapplied to this area of research. This paper also contributes to the dialogue of the household composition by considering three untried variables: number of adults, number of children, and literacy of all household members. Results show that households are most likely to adopt formal savings, when provided access, if they have a head who can read Chichewa, a functional cellphone, more adults who can read Chichewa, and are close to the bank service. The field evidence comes from research conducted over a two year period 2008-2010 in sampled regions of Central Malawi. Acknowledgements I thank Professor Jeffrey A. Flory for guiding my thesis with his expertise in economic development, and allowing me to take a marketing perspective on the topic. Professor Flory was highly involved in this project throughout the eight month period of its development. I am particularly indebted for his exhaustive feedback and suggestions that have played an integral role in carving out this finished product. The Opportunity International Bank of Malawi, the Bill & Melinda Gates Foundation, the Wadonda Consullt, and the IRIS/FSA team at the University of Maryland deserve recognition for conducting, collecting, and reviewing the field evidence analyzed in this paper.