[VIDEO] Does Commitment Savings Alter Seasonal Poverty Dynamics among the Ultra-poor? Evidence from High-frequency Data

While the seasonal dimension of poverty is well discussed, little is known about its degree and countermeasure for the ultra-poor population. Using unique bi-weekly data for 10months over two years from rural Bangladesh, we first show that consumption of the year round ultra-poor is subject to large seasonal
fluctuations, with a significant decline during the agricultural lean period. We then conducted a randomized controlled trial to examine whether time-locked commitment savings schemes can prevent the fallin consumption. We randomly offered households commitment-savings products, either with market (8% per annum) orpremium (50%) interest rates. Compared with the control group, we observed that premium-interest account holders increased consumption by 7-12% during the hungry season; its effect, however, did not last long. Typical market-interest account holders did not show any consumption impacts. These findings suggest that access to commitment savings alone is ineffective to smooth consumption of the ultra-poor.