Savings and the Poor

It is estimated that 3 out of 4 adults in developing and middle income countries don’t have bank accounts. Only about 10 percent of the 2.5 billion people living on less than $2 per day have access to a bank account. Nonetheless, researchers have confirmed that poor people actively save in cash and through informal mechanisms, but these tools do not always meet their needs. Research from Portfolios of the Poor shows that over the course of a year, a typical poor household in Bangladesh, India or South Africa uses no less than four and typically closer to ten types of financial instruments. Savings accounts are in high demand by poor people though the formal banking sector has been unable to serve them for a variety of reasons including cost. However, research has suggested safe savings options help people to manage emergencies (like illness) increase investment in livelihoods, and empower women.

Below, you’ll find some of the more recent research on savings and the poor, including a few extremely accessible articles. As always, this is by no means a complete list of all the research on the subject. If there are important studies missing from this list, please add them via comments.

Commitments to Save: A Field Experiment in Rural Malawi
, April 2011
Authors: Lasse Brune ,  Xavier Giné and Dean Yang
The authors report the results of a field experiment that randomly allocated smallholder cash crop farmers to treatments facilitating savings in formal savings accounts. 

Mobile Money: The Economics of M-Pesa, January 2011
Authors: William Jack (World Bank) and Tavneet Suri (Massachusetts Institute of Technology - Sloan School of Management)
Mobile money is a tool that allows individuals to make financial transactions using cell phone technology. In this paper, the authors report initial results of two rounds of a large survey of households in Kenya, the country that has seen perhaps the most rapid and widespread growth of a mobile money product known locally as M-PESA in the developing world.

Borrowing to Save: Perspectives from Portfolios of the Poor, August 2010
Author: Jonathan Morduch
This paper explores the phenomena of poor families borrowing even when they have savings sufficient to cover the loan.


Savings and the Poor: A Better Mattress
The Economist - March 2010
In this article on the growing attention being given to the importance of access to savings services, FAI and ideas42 co-founder Sendhil Mullainathan discusses some of the difficulties of saving. 

Savings for the Poor: Banking on Mobile Phones, August 23, 2010
Author: Ignacio Mas, Bill and Melinda Gates Foundation
The paper reviews the relevance of formal financial services - and in particular savings - to poor people, the economic factors that have hindered the mass-scale delivery of such services in developing countries, and the technology-based opportunities that exist today to make massive gains in financial inclusion.

Helping the Poor Save More

Stanford Social Innovation Review-Winter 2010
In this article, FAI and IPA co-founder Dean Karlan argues that the poor are just like everyone else: They do not save as much as they would like. Yet, unlike their richer counterparts, poor people do not receive the cleverly marketed, carefully tested financial products that could help them reach their savings goals more easily. To enrich the bottom of the pyramid, bankers to the poor should make saving money easier by using the latest findings from economics and psychology.

Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya, January 2009
Authors: Pascaline Dupas, Jonathan Robinson
This paper presents results from a field experiment in rural Kenya designed to test whether savings constraints prevent the self-employed from increasing the size of their businesses.