East Asia and Pacific
Household Decision Making and Savings Impacts: Further Evidence from a Commitment Savings Product in the PhilippinesAshraf, Karlan and Yin (2006)
Commitment devices for savings could benefit those with self-control as well as familial or spousal control issues. We find evidence to support both motivations. We examine the impact of a commitment savings product in the Philippines on household decision making power and self- perception of savings behavior, as well as actual savings. The product leads to more decision making power in the household for women, and likewise more purchases of female-oriented durable goods. We also find that the product leads women who appear time-inconsistent in a baseline survey to self-report being a disciplined saver in the follow-up survey. For impact on savings balances, we find that the 81% increase in savings after one year did not crowd out savings held outside of the participating bank, but that the longer-term impact over two and a half years on bank savings dissipated to only a 33% increase, which is no longer statistically significant. We discuss reasons why the effect dissipated and the implications for designing and implementing sustainable, equilibrium-shifting interventions.
Intervention settings: Rural: greater Butuan City.
Intervention description: Treatment group received a lock box for their savings that they were not allowed to open until they had met their savings goals.
Sample: 1,777 Green Bank clients (1,635 in follow-up) with savings accounts in two branches with identifiable addresses. 60% female and 77% married.
Findings: Household savings increased by 81% after one year (without crowding out other savings). Decision-making power also increased significantly in the treatment group (especially among married women with below-median decision-making power pre-intervention). After 32 months, administrative data indicate that the effect on household savings was no longer significant.
Ashraf, Karlan, and Yin (2007)
Female "empowerment" has increasingly become a policy goal, both as an end to itself and as a means to achieving other development goals. Microfinance in particular has often been argued, but not without controversy, to be a tool for empowering women. Here, using a randomized controlled trial, we examine whether access to and marketing of an individually-held commitment savings product leads to an increase in female decision-making power within the household. We find positive impacts, particularly for women who have below median decision-making power in the baseline, and we find this leads to a shift towards female-oriented durables goods purchased in the household.
Intervention settings: Unknown.
Intervention description: Individual commitment savings product provided by a rural bank. Account matures only when a pre-specified goal is reached. Savings training.
Sample: 3,125 bank clients and non-clients (60% women and most married).
Findings: Consumption of durables associated with women increased only among married women who started below the median level of decision-making power.
Subsidizing Vocational Training for Disadvantaged Youth in Colombia: Evidence from a Randomized TrialAttanasio et al (2011)
This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005. This randomized trial offers a unique opportunity to examine the impact of training in a middle income country. We use originally collected data on individuals randomly offered and not offered training. The program raises earnings and employment for women. Women offered training earn 19.6 percent more and have a 0.068 higher probability of paid employment than those not offered training, mainly in formal-sector jobs. Cost-benefit analysis of these results suggests that the program generates much larger net gains than those found in developed countries. (JEL I28, J13, J24, O15)
Intervention settings: Rural.
Intervention description: One treatment group was offered a group lending product, while the other was offered an individual lending product. Randomization was done at the village level.
Sample: 4,353 individuals.
Findings: Significant increase in business ownership (10%), food consumption (17%) and asset ownership among those offered a group lending product.No effect among those offered an individual lending product. No significant effect on household income. No difference in repayment rates between the two treatment groups.
Attanasio et al (2011)
Although microfinance institutions across the world are moving from group lending towards individual lending, this strategic shift is not substantiated by sufficient empirical evidence on the impact of both types of lending on borrowers. We present such evidence from a randomised field experiment in rural Mongolia. We find a positive impact of access to group loans on food consumption and entrepreneurship. Among households that were offered group loans the likelihood of owning an enterprise increases by 10 per cent more than in control villages. Enterprise profits increase over time as well, particularly for the less educated. For individual lending on the other hand, we detect no significant increase in consumption or enterprise ownership. These results are in line with theories that stress the disciplining effect of group lending: joint liability may deter borrowers from using loans for non-investment purposes. Our results on informal transfers are consistent with this hypothesis. Borrowers in group-lending villages are less likely to make informal transfers to families and friends while borrowers in individual-lending villages are more likely to do so. We find no significant difference in repayment rates between the two lending programmes, neither of which entailed weekly repayment meetings.
Intervention settings: Rural.
Intervention description: Tested opening of MFI branches by assigning group liability loans, Individual loans or having no MFI branch. Group liability and individual credit originally intended for business purposes.
Sample: 1,148 adult women (987 in follow-up) from 40 communities.
Findings: 11% statistically insignificant increase in total per capita expenditures. Positive impact of both group and individual loans on business profits among women clients in areas with access to credit for longer period of time. Positive impact on likelihood of owning enterprise among HH offered a group loan. Group liability loans had positive impact on HH business creation (no impact of individual credit). Credit had positive impact on women's profits in areas with access to credit for longer period of time. No significant impact on self-employment, wage labor or total earnings. No impact on likelihood of owning enterprise among HH offered individual loans or group liability credit on individual credit.
This paper evaluates the outreach and impact of two micro_nance programs in Thailand, controlling for endogenous self-selection and program placement. Results indicate that the wealthier villagers are signi_cantly more likely to participate than the poor. Moreover, the wealthiest often become program committee members and borrow substantially more than rank-and-_le members. However, local information on creditworthiness is also used to select members. The programs positively a_ect household welfare for committee members, but impact is insigni_cant for rank-and-_le members. Policy recommendations include vigilance in targeting the poor, publicly disseminating the program rules and purpose, and introducing and enforcing eligibility criteria.
Intervention settings: Rural/
Intervention description: Credit. Some savings, which may be used to provide loans.
Methodology: Pipeline design, panel data of participating and non-participating HH and moderate robustness.
Sample: 445 households. Most engage in small-scale agriculture (91.3% of women and 90.4% of men surveyed listed farming as primary or secondary occupation).
Findings: Positive impact on savings and business revenues of wealthier women members (no impact on poorer women). Increased business sales among wealthier members (no impact on poorer women). Wealthier women were more likely to participate in village banks than poor women (mistargeting).
Group Versus Individual Liability: Short and Long-term Evidence from Philippine Microcredit Lending GroupsGine and Karlan (2011)
Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in short-run or long-run default and larger groups after three years in pre-existing areas, and no change in default but fewer groups created after two years in the expansion areas.
Intervention settings: Rural.
Intervention description: Compares impact of individual and group liability credit, and group and individual savings models. Group (group solidarity) and individual-liability credit for business expansion provided by a rural bank. Mandatory savings for group liability loans; voluntary individual savings accounts. Initial loan $18 to $90.
Sample: 100% female microcredit and savings clients.
Findings: Conversion from group to individual liability did not negatively affect loan repayment rates. Individual loans (with no savings requirement) resulted in lower voluntary savings levels. Individual liability loans attracted more new clients.
Kaboski and Townsend (2005)
This paper uses variation in policies and institutional characteristics to evaluate the impacts of village-level microfinance institutions in rural Thailand. To identify impacts, we use policies related to the successful/unsuccessful provision of services as exogenous variation in effective financial intermediation. We find that institutions, particularly those with good policies, can promote asset growth, consumption smoothing and occupational mobility, and can decrease moneylender reliance. Specifically, cash-lending institutions-production credit groups and especially women's groups-are successful in providing intermediation and its benefits to members, while buffalo banks and rice banks are not. The policies identified as important to intermediation and benefits: the provision of savings services, especially pledged savings accounts; emergency services; and training and advice. Surprisingly, much publicized policies such as joint liability, default consequences, or repayment frequency had no measured impacts.
Intervention settings: Rural.
Intervention description: Credit (some training in income-generation), savings, village-level MFIs, and some use production credit groups and women's groups.
Methodology: Structural model, longitudinal dataset and moderate robustness.
Sample: Poor households.
Findings: Women's groups and pledged savings positively associated with increased job mobility. Women's groups positively affected business start-up. Positive impact of cash loans from production credit groups and women's groups on HH asset growth. Positive association of flexible and pledged savings products with less reduction of consumption. Negative effect of flexible savings on business formation and job mobility. Pledged savings weakly associated with starting a business. Weak effect of pledged savings on business formation.