Salary payment into bank accounts spurs savings: study

Wage payment through electronic system, particularly to bank accounts, encourages workers to save, said a study unveiled yesterday.

“It also causes them to shift away from the informal system and into the formal one,” said Emily Breza, assistant professor of economics at Harvard University, after presenting preliminary findings of the study at a programme.

UK-based International Growth Centre and Brac Institute of Governance and Development jointly organised the event at the capital's Six Seasons Hotel. Over 3,000 workers of two garment factories were interviewed for the study.

The study found that the workers did not empty their bank accounts as soon as their salaries came. And the women tend to save more and also prefer to get their salaries into their bank accounts, according to the findings.

“Across the board we see a pretty big increase in trust in the financial system. Workers get exposed to financial products and are better able to smooth shocks that happen,” Breza said. The study found that people who had mobile banking accounts were better able to mitigate shocks.

“Savings responses are stronger for banks while the shocks responses are stronger for mobile banking. And across the board, the trust improves for both bank and mobile,” she added.

Mobile banking system has been around for a while now but it is yet to be treated as an instrument for savings, said Wahiduddin Mahmud, an economist. “It is just used for sending money,” he added.

In another paper, Wahid Abdallah, research fellow of BIGD, said electronic filing system increases the speed of disposal of files for public service delivery. He said e-filing system was introduced first in Jessore in 2013 and was later expanded to 59 districts.

Initially, the number of days for disposal of files was high as officials had to go through the learning process. But over time, it came down to 28-29 days. “Speedy clearance gives impetus to business and economic activities,” said Abdallah

The benefit of money transfer through the mobile banking system is high by and large, said Mashiur Rahman, economic affairs adviser to the prime minister.

On the e-fling system for public service delivery, he said it has definitely improved the speed. “But I do not think it has effectively improved the content of the decision.”    

Rahman said it is important to identify the person who is responsible for making decision, who has the authority and what the accountability of the person, and what are the sanctions that can be applied if the person fails.

Sultan Hafeez Rahman, country director of IGC in Bangladesh and executive director of BIGD, also spoke among others.