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Authors: Glenn D. Westley and Xavier Martín Palomas

Big Questions: Can Savings be delivered profitably?, Savings and How do people save?

Abstract:

This study examines quantitatively whether or not small savers—defined here as the half of all savings clients of a microfinance institution (MFI) with the smallest deposit account balances—contribute to or undermine the sustainability of the MFI. MFI sustainability has long been accorded a place of central importance in microfinance for reasons that are well known. Perhaps because of the necessary focus of microfinance for so many years on lending, achieving sustainability has often been thought of in terms of reducing loan granting and recovery costs and charging sufficiently high loan rates. Arguably, less attention has been paid to the impact of other products, such as savings accounts and particularly small savings accounts, on MFI sustainability.