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PROSAVING - Linking Social Protection Payments to Savings
The goal of this Program is to increase the availability of financial products and services targeted to low income populations. The purpose is to establish the business case for the development and implementation of liquid and contractual savings products targeted to recipients of conditional cash transfers or other social protection payments in the LAC region. The expected outcomes of this Program are: (i) 136,000 CCT recipients access liquid or contractual savings accounts; (ii) an additional 45,000 low income people access, for the first time; and (iii) 14 Financial Institutions (FIs) offer liquid savings accounts for transactions purposes and/or contractual savings for capital accumulation.

Project Detail

Country

Regional

Project Number

RG-O1661

Approval Date

March 16, 2011

Project Status

Implementation

Project Type

Container

Sector

FINANCIAL MARKETS

Subsector

BANKING MARKET DEVELOPMENT

Lending Instrument

-

Lending Instrument Code

-

Modality

Facility

Facility Type

FFG (Facility Financing for Grants)

Environmental Classification

-

Total Cost

USD 3,758,285.00

Country Counterpart Financing

USD 0.00

Original Amount Approved

USD 3,758,285.00

Financial Information
Publications
Published 2024
Financial Development, Growth, and Inequality: The Role of Institutions in Latin America and the Caribbean
This publication explores the relationships between institutions, financial development, and income inequality. It assesses the extent of reforms that can promote financial development and argues that institutional improvements capable of increasing financial development can simultaneously mitigate income inequality. This work, focusing on the Latin American and Caribbean region, uses a broad set of measures of financial development, financial institutions, and capital markets. It employs a comprehensive set of inequality indicators and income definitions, as well an econometric model of the financial possibility frontier, to demonstrate that institutions contributing to financial development also help reduce income inequality.
Blogs
Published 2024
Boosting Financial Inclusion Among the Vulnerable
By 2021, only 31% of Chile’s country’s population over 15 had saved in a financial institution, with especially low rates among the very poor, depriving them of the benefits of a range of financial services, including savings accounts, credit, and insurance products. The issue of how to increase financial inclusion and, in the process,
Blogs
Published 2024
Impulsando la inclusión financiera entre los vulnerables
En 2021, sólo el 31% de la población mayor de 15 años en Chile había ahorrado en una institución financiera, con tasas especialmente bajas entre los más pobres, lo que les priva de los beneficios de una serie de servicios financieros, como cuentas de ahorro, crédito y productos de seguros. La importancia de aumentar la
Publications
Published 2024
Taxation when Markets are not Competitive: Evidence from a Loan Tax
We study the interaction of market structure and tax-and-subsidy strategies utilizing pass-through estimates from the unexpected introduction of a loan tax in Ecuador, a quantitative model, and a comprehensive commercial-loan dataset. Our model generalizes bank competition theories, including Bertrand-Nash competition, credit rationing, and joint-maximization. While we find the loan tax is distortionary, neglecting the possibility of non-competitive lending inflates estimated tax deadweight loss by 80% because non-competitive banks internalize some of the burden. Conversely, subsidies are less effective in non-competitive settings. If competition were stronger, tax revenue would be 10% lower. The findings suggest that policymakers should consider market structure in tax-and-subsidy strategies.
Publications
Published 2024
The Promises of Digital Bank Accounts for Low-income Individuals
The push for adopting digital modes of payment rests on three promises: increased efficiency of transactions, increased financial inclusion, and improvements in the financial well-being of low-income individuals. We experimentally test the extent to which these promises are fulfilled. We exploit the random assignment into an intervention to encourage direct deposits of recurrent government benefits into digital bank accounts in Colombia. Switching from cash to direct deposits reduces disbursement errors and increases access to benefits among eligible beneficiaries. It also increases the ownership of bank accounts, the demand for formal loans, and loan take-up among individuals without a financial history. However, we do not find evidence of improvements in financial well-being across any of our metrics.
Blogs
Published 2022
Financial Challenges for Bahamian Firms
Financial institutions and markets are integral in enabling transactions, intermediating savings for businesses in need of financing, allocating scarce financial resources and facilitating risk diversification. Modern economies rely on these financial institutions and markets to finance private sector development. For economies like The Bahamas, the post-pandemic recovery will be fueled in part by such domestic
Blogs
Published 2023
¿Cómo se conectan la música clásica y el futuro de las pensiones?
Del mismo modo que un director de orquesta dirige una sinfonía, los responsables de las políticas de pensiones en América Latina y el Caribe han venido orquestado estrategias innovadoras para optimizar la suficiencia, cobertura y sostenibilidad de sus sistemas de pensiones. En efecto, la región está explorando nuevas “partituras pensionales” que incluyen el uso de
Publications
Published 2021
Can a Budget Recording Tool Teach Financial Skills to Youth?: Experimental Evidence from a Financial Diaries Study
We study the impact of a mobile app to record daily financial transactions, coupled with enumerator monitoring visits every two weeks, on youths' investment in financial literacy and financial behavior. The treatment led to a positive and statistically significant effect on financial literacy scores and greater awareness of market prices. Youth in the treatment group experienced significant improvements in access to credit. These effects persist eight months after the intervention is over.
Publications
Published 2023
President's Report 2023
IDB Report of the President 2023.
Blogs
Published 2023
Can Cash Transfers to Non-Poor Households Prevent Poverty?
Over the past five years, social protection has expanded dramatically around the world. In 2020, one in six people globally received government transfers. This expansion in coverage, particularly in upper- and middle-income countries, has produced a new set of beneficiaries: vulnerable, non-poor households. Scaling up the coverage of social protection programs has the potential to
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