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

On March 11, 2012, professors Pascaline Dupas and Jonathan Robinson published a study on "Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya" which was conducted in 2006, 2007, and 2008 and funded by The Abdul Latif Jameel Poverty Action Lab (J-PAL) and Innovations for Poverty Action (IPA). Sampling was done in three waves with a total of 200 people. Dupas and Robinson worked with the Financial Services Association, a village bank in the market town of Bumala between Nairobi and Kampala, in order to offer savings accounts to randomly selected microenterpreneurs. These savings accounts did not pay interest, but clients were charged for withdrawals.

The researchers analyzed savings account usage, which was recorded daily in logbooks over a period of several months. The researchers found that women benefited from these accounts and invested more in their businesses than men. Additionally, there was not a very high uptake of savings accounts, which could be attributed to people's mistrust of village banks. To learn more, please refer to the following post by David Roodman called “First Randomized Trial of Microsavings."