Research / Weiss Fund Supported ResearchAug 26, 2016

Consumer Perceptions and Saving Behavior

Kehinde F. Ajayi

A government audit in 2009 revealed a third of commercial banks in Nigeria were critically insolvent. The Central Bank bailed them out and sanctioned their CEOs. Using survey data on individual perceptions and financial behavior, I exploit variation in baseline market shares and consumer attitudes to estimate effects of this regulatory shock on saving behavior. Exposure to insolvent banks increased bank use for people reportedly interested in financial matters. Bank use declined in places with high initial concern about bank stability, particularly among people uninterested in financial matters. These results suggest financial information crucially affects consumer perceptions following a crisis.