Randomized Microfinance Evaluations and Improved Product Design

CGAP has released a new paper, Latest Findings from Randomized Evaluations of Microfinance, which synthesizes the latest research findings from around the world on a range of financial services, including credit, savings, and microinsurance. These existing studies offer a foundation for examining when particular products and designs work, for whom, and why, so that products and delivery approaches can be adjusted to meet the needs of poor people.

Written jointly with researchers from the Financial Access Initiative, Innovations for Poverty Action, and the Abdul Latif Jameel Poverty Action Lab (J-PAL) at the Massachusetts Institute for Technology, the research institutes that jointly pioneered the use of randomized techniques to evaluate microfinance, the paper synthesizes well over a dozen studies, including those that examine the impact of microcredit and savings, and a series of studies that test product design changes.

Examples of simple and often inexpensive design tweaks that have shown a significant impact are detailed in the paper, such as account labeling, reminders to save through letters or text messages, and innovative products such as rainfall insurance.