to save more in the bank.<sup>2</sup>

# **2 Experimental Design**

In July 2012, we randomly selected and interviewed 872 households from 14 villages surrounding the Mulanje market in southern Malawi.<sup>3</sup> All these villages are located within six kilometers of the local NBS branch.<sup>4</sup> These households were offered assistance in opening a basic savings account at NBS and MK 500 (USD 2.72 using the 2016 PPP exchange rate) was deposited into their account to cover the minimum balance. This minimum balance was enforced in the sense that the bank would deny any withdrawal that would bring the balance below MK 500. In addition, the monthly account maintenance fees of MK 400 per month were paid by the research team directly to the bank and were thus not deducted from subjects’ balances. Because the bank did not charge for transactions, the subsidized basic account offered in the study was free to customers.<sup>5</sup> The take-up rate for these free accounts was 85 percent.

From the 747 households that opened subsidized accounts, 600 were randomly chosen in April 2015 to participate in another field experiment that induced account usage. That experiment varied whether households received a large transfer (MK 25,000 or about USD 160 using the 2015 PPP exchange rate) and whether this transfer was made in cash or directly deposited into subjects’ accounts (see Brune et al., 2017). The transfer increased the number of transactions that participants made at NBS. Account holders who received transfers had the same number of bank transactions in the month preceding the transfer as those who did not receive the transfer. However, transfer recipients made significantly more transactions with their accounts after receiving the transfers, even excluding initial withdrawals of the amount transferred. The increased usage began in the month following the transfers and persisted, with a cumulative average of 1.5 more transactions 12 months after the transfers. Thus, the transfer treatment provides random variation in subjects’ experience using their bank accounts.

> 2A related literature studies how experience can attenuate behavioral anomalies such as the endowment effect, another manifestation of the status quo bias where individuals are reluctant to part with their endowment (Thaler, 1980), and focus on experience acquired by transacting in the market rather than by gaining familiarity with the product (List, 2003, 2004; Feng and Seasholes, 2005; Dhar and Zhu, 2006; G ̈achter et al., 2009; Greenwood and Nagel, 2009; Seru et al., 2010; Engelmann and Hollard, 2010; List, 2011; Anagol et al., ming).

> 3Malawi is a country in eastern Africa with relatively low levels of financial inclusion. According to the 2017 Global Findex database (Demirgu ̧c-Kunt et al., 2018), 34 percent of adults had bank accounts or mobile money but only nine percent had formal savings.

> 4NBS Bank, formerly known as New Building Society is one of the 10 commercial banks operating in Malawi, with a network of 36 branches throughout the country.

> 5Similar to other basic savings accounts in Malawi, the account did not pay interest. Because the inflation rate was above 20 percent throughout the study, the real rate of return was negative.

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