This research will provide experimental evidence for the savings puzzle in emerging economies: the phenomenon where individuals forego cheaper dissaving in favour of more expensive borrowing. Through detailed surveys and an artefactual experiment with Filipino migrant domestic workers in Hong Kong, the project will both examine whether the puzzle truly exists, and its determinants. Specifically, it will shed light on the relative importance of financial illiteracy, problems of self-control, and kin taxes. It will also examine whether market institutions can help resolve the savings puzzle. In particular, might high-interest savings products help individuals overcome their behavioural constraints to saving and asset accumulation? Research findings will inform both policy-makers and practitioners working to help the poor in emerging economies escape poverty.
Get updates from HKUST IEMS