Uptake, use, and impact of Islamic savings: Evidence from a field experiment in Pakistan

We implement a randomized field experiment in Pakistan to evaluate three interventions designed to encourage poor Muslim women to open and use Islamic savings accounts. First, an intervention that increases religious salience by using a religious speech that highlights the purposes, benefits, and desirability of savings and dispels the misconception that all formal saving is impermissible in Islam, mainly by quoting directly from the Quran; in contrast to a conventional speech conveying the same information without quoting from the Quran. Second, a subsidy that covers the account opening fee; compared to no subsidy. Third, assistance with completing the account opening form; compared to no such assistance. We find that the subsidy and assistance encourage greater uptake, and that adding religious salience induced by the religious speech to these efforts prompts even greater uptake — far greater, in fact, than the combination of the conventional speech with subsidy or assistance. The most effective intervention, comprising a religious speech in combination with a subsidy and assistance, increases uptake by approximately 60 percentage points, compared to an approximate increase of 5 percentage points for either subsidy or assistance in combination with the conventional speech. On its own, however, the religious speech does not significantly enhance uptake compared to the conventional speech, indicating that financial as well as educational/administrative constraints, and high cognitive load, present insurmountable barriers to uptake in our context. Therefore, holistic strategies to increase savings account uptake, that recognize and engage with the religious context while at the same time addressing practical barriers, should be prioritized.