activities is available. The questionnaire also includes sections on remittances and economic shocks. It also asks unbanked households to list reasons for not having an account in a formal financial institution.

We constructed per-capita expenditure, income, assets, and liabilities aggregates. In a few cases, the questions were asked in such a way that we had to exercise judgment in order to calculate a sub-aggregate measure such as wage income. We also imputed community medians, defined appropriately in each case, to some missing values. For almost all the variables, less than one percent of observations had to be imputed through community medians. Because of this and the customary arguments for the unreliability of income measures, per-capita expenditure is our preferred measure of household welfare.

Even so, we had some observations with implausibly high or low consumer expenditures. Therefore, we also constructed a trimmed sample where we excluded the top and bottom 1% of households ranked by per-capita expenditures, leaving us with 2,531 treatment and 2,140 control observations. This is the sample we use in our analysis of household characteristics. However, all of our qualitative conclusions would remain unchanged if we used the full sample.

The survey contained a section on the use of informal financial assets. Unfortunately, most of the questions in this section, except those about cash at home, were not asked of most treatment households. This makes comparisons of the use of informal financial assets such as _Tandas_ 4 or loans from friends between treatment and control households unreliable.

We also use the data to discuss and contrast the usage and the terms of financial services between banked and unbanked households. In these comparisons, we leave out the missing observations.

Two features of our data are worth keeping in mind when interpreting our results. First, while our data set is representative of the universe of Mexican households that have accounts in _Cajas_ , it was not designed to be representative of _all_ Mexican households. Our results are thus limited to this sample of banked households and their unbanked neighbors. Second, as is also the case with nearly all the studies in this field,5 we could find no plausibly exogenous source of variation in the household attributes which are candidates for being determinants of the banking choice. The observed characteristics of these households could be endogenous to their financial decision-making if there were two-way causation or unobserved correlated attributes. For example, education might be correlated with some unobserved belief about banks which affects the household’s decision to open a savings account. This limits our ability to draw causal inferences or to infer parameters such as the effect of one additional school year on the probability of opening an account.

# **3   Self-reported reasons for not having bank accounts**

The unbanked households in the BANSEFI survey were asked to pick one out of twelve possible reasons for never having had a savings or investment account. The vast majority of unbanked households (about 90%) said that they did not have a bank account because they had never had the money to do it (Table 1). Not wanting an account came a distant

> 4 _Tandas_ are the Mexican version of informal rotating savings and credit associations. 5 With some exceptions, such as Pande and Burgess (2005) and Aportela (1999).