Journal Article
Improving Financial Inclusion through the Delivery of Cash Transfer Programmes

This paper follows a quasi-experimental research design to assess the impact of the electronic payment system of Mexico’s Progresa-Oportunidades-Prospera (POP) programme. The switch from cash payments to electronic payments delivered via savings accounts is found to have medium-term effects on savings decisions, transaction costs, and coping strategies.

Overall, the study finds that, following the intervention, a substitution effect emerged between saving portfolio choices, with the poor favouring bank accounts over informal saving arrangements. It also found that the Oportunidades savings account led to an increase in remittance reception, which in turn had important implications for household consumption smoothing and risk management decisions.

The study also reveals impact heterogeneity depending on household composition and the rural-urban divide, with important implications for replicability of similar policy innovations in other countries.