Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya

Does limited access to formal savings services impede business growth in poor countries? To shed light on this question, we randomized access to non-interest-bearing bank accounts among two types of self-employed individuals in rural Kenya: market vendors (who are mostly women) and men working as bicycle-taxi drivers. Despite large withdrawal fees, a substantial share of market women used the accounts, were able to save more, and increased their productive investment and private expenditures. We see no impact for bicycle-taxi drivers. These results imply significant barriers to savings and investment for market women in our study context. Further work is needed to understand what those barriers are, and to test whether the results generalize to other types of businesses or individuals.

Dupas and Robinson (2009)


Rural.RCT - Moderate rigor (small sample size).Individual commitment savings products offered by a village bank. Interest-free account; high withdrawal fees. Tested the importance of savings constraints for self-employed individuals.Positive impact of savings on business investment among women (40% increase). Increase in women's private expenditures (37 to 40% higher). Some impact on making women less vulnerable to health shocks. No effect for men. microentpreneurs.