Impact of savings groups on the lives of the poor

Karlan, Dean; Savonitto, Beniamino; Thuysbaert, Bram; Udry, Christopher

doi:10.1073/pnas.1611520114

Cited by 156 publications

(149 citation statements)

References 21 publications

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“…According to the CIA World Factbook, the density of roads in Kenya is 0.28 kilometers per square kilometer of land area, while it is 0.9 kilometers per square kilometer of land area in Tanzania. 35 While outside the scope of this cost-benefit analysis, please note that storage without chemicals can enable farmers to access higher market prices due to the premium on pesticide-free food. but people may have chosen to store more in future years.…”

Section: Cost-benefit Calculationmentioning

confidence: 99%

Grain Today, Gain Tomorrow: Evidence from a Storage Experiment with Savings Clubs in Kenya

Aggarwal¹,

Francis²,

Robinson³

2018

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We are grateful to Ashwini Chhatre, Maitreesh Ghatak and Dahyeon Jeong for useful discussions, and to 2 anonymous referees and seminar participants at IIM Bangalore, the Indian School of Business, and the Naval Postgraduate School for helpful comments. We thank Claudia Casarotto for research support. We thank ATAI and the University of California, Santa Cruz for funding, and IPA Kenya for administrative support. We thank Michael Dalious, Kathryn Dutile, Maira Reimao, and Dario Sidhu of Evidence Action for their collaboration. ABSTRACTMany farmers in the developing world lack access to effective savings and storage devices. Such devices might be particularly valuable for farmers since income is received as a lump sum at harvest but expenditures are incurred throughout the year, and because grain prices are low at harvest but rise over the year. We experimentally provided two saving schemes to 132 ROSCAs in Kenya, one designed around communally storing maize and the other around saving cash for inputs. About 56% of respondents took up the products. Respondents in the maize storage intervention were 23 percentage points more likely to store maize (on a base of 69%), 37 percentage points more likely to sell maize (on a base of 36%) and (conditional on selling) sold later and at higher prices. We find no effects of the individual input savings intervention on input usage, likely because baseline input adoption was higher than expected.

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Section: Cost-benefit Calculationmentioning

confidence: 99%

Grain Today, Gain Tomorrow: Evidence from a Storage Experiment with Savings Clubs in Kenya

Aggarwal¹,

Francis²,

Robinson³

2018

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“…For example, this would create a platform for integrating mobile money and VSLAs as a development initiative. Of course, previous studies have analysed the effects of mobile money on financial inclusion and entrepreneurship (see FinMark Trust, 2016;Asongu and Nwachukwu, 2017) while others have assessed the impact of VSLAs on financial inclusion and entrepreneurship (see Karlan et al, 2017). These studies have found positive impacts of both VSLAs and mobile money services on financial inclusion and entrepreneurship.…”

Section: Problem Statement and Relevance Of The Studymentioning

confidence: 99%

“…Rural women are therefore the most financially excluded population group, and this would affect their entrepreneurial activities and outcomes because effective financing mechanisms contributes to improved entrepreneurship and hence economic development of a country (Toma et al, 2014). Additionally, the role of financing mechanisms in economic development is enhanced by information and communication technologies (ICT) (Andrianaivo and Kpodar, 2011) and VSLAs have been shown to have positive impacts on business outcomes and financial inclusion (Karlan et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

Can Mobile Money Induce Financial and Entrepreneurial Behaviors of Members of Village Savings and Loan Associations in Rural Malawi?

Chiwaula¹

2018

AEA Randomized Controlled Trials

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Over 70% of Malawians living in rural areas are excluded from the formal financial sector, which has led to a drive in government's efforts towards increasing financial inclusion through expansion of digital payment systems and group savings (most importantly the Village Savings and Loan Associations (VSLAs)), amongst others. The main aim of the study therefore was to measure the impact of mobile money and financial literacy training together with reminder SMSs among VSLAs members would induce financial inclusion and entrepreneurial outcomes. This was achieved through the implementation of a clustered randomized control trial in two purposively selected districts in Malawi. The trial had two randomly selected study groups each with 21 randomly selected VSLAs: (1) The control arm which received no intervention;and (2) The treatment arm which received face to face training on use of mobile money services for business, financial inclusion, and SMSs reminders on the content of the trainings. We used the Analysis of Covariance (ANCOVA) regression analysis to estimate the casual effect of the intervention. The results indicate that mobile money and financial literacy promotion impacted on knowledge of mobile money services and utilisation of mobile money services. The findings show that the treatment effect of the intervention on the knowledge to use mobile to save money was 6% and the effect on the knowledge that they can take loans was 5%. The treatment effects on usage of mobile money to receive money and usage of mobile money to save money were 10% and 5%, respectively. The treatment also led to the digitization of VSLAs by 7%. With these findings, we conclude that mobile money and financial literacy training together with reminder SMSs has positive impact on mobile money knowledge and utilisation to individuals and VSLAs. The experiment fails to show significant treatment effect on financial inclusion and entrepreneurial behaviour partly due to the length and the timing of the experiment. Further research should consider observing the participants for a longer period.3

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“…Reviews from either a policy or an academic perspective regarding the challenges of microf nance are provided by WorldBank (2008); Armendáriz de Aghion and Murdoch (2004); Banerjee and Duf o (2010);Morduch (1999);Karlan and Morduch (2010).3 Broadly, community-based credit approaches consist of fostering local credit funds to be managed by community members. While self-funded village credit groups are a growing research topic in the literature (seeDeininger (2013);Greaney et al (2016);Ksoll et al (2016);Karlan et al (2017), among others), there are other types of government-funded programs with a community based approach around the world such as the Andhra Pradesh Rural Poverty Reduction Project in India, and the Rural Financial Institutions Programme in Uttar Pradesh. However, these programs foster the creation of self-help groups as opposed to village funds.…”

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confidence: 99%

Targeting Credit through Community Members

Vera-Cossio

2019

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Delegating the allocation of public resources to community members is an increasingly popular form of delivering development programs and are associated with a tradeoff between improved information about potential benef ciaries and favoritism towards local elites. Unlike targeting cash transfers to the poor, the optimal targeting of credit is a more complex problem involving issues of productivity, repayment, and market responses: This paper analyzes this problem using a large-scale lending program, the Thai Million Baht Credit Fund, which decentralizes the allocation of loans to an elected group of community members, and provides three main results. First, exploiting a long and detailed panel, I recover pre-program structural estimates of household total factor productivity and f nd that resources from the program were not allocated to high-productivity, poor households, which is inconsistent with poverty and productive eff ciency as targeting criteria. Second, using socioeconomic networks data, I show that actual targeting is strongly driven by connections to village elites and is related to lower program profitability, which suggests favoritism as a reason for mistargeting. Finally, I exploit quasi-experimental variation in the rollout of the program and uncover evidence that, in general equilibrium, informal credit markets compensate for targeting distortions by redirecting credit towards unconnected households, albeit at higher interest rates than those provided by the program. The results highlight the limitations of community-driven approaches to program delivery and the role of markets in attenuating potential targeting errors.

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Impact of savings groups on the lives of the poor

Cited by 156 publications

References 21 publications

Grain Today, Gain Tomorrow: Evidence from a Storage Experiment with Savings Clubs in Kenya

Grain Today, Gain Tomorrow: Evidence from a Storage Experiment with Savings Clubs in Kenya

Can Mobile Money Induce Financial and Entrepreneurial Behaviors of Members of Village Savings and Loan Associations in Rural Malawi?

Targeting Credit through Community Members

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