Observations of the USAID Evidence Summit – Day One, December 12

I was a speaker at this two-day meeting in Washington, DC last week. It was designed to educate USAID staff in the Bureau for Economic Growth, Education & Environment (E3) and the Bureau for Food Security (BFS) about the current evidence of impacts of microfinance, ultra-poor programs, value chain development, and mobile solutions. The subtitle of the Evidence Summit was “From Microfinanc read more...

More about Dupas and Robinson on the Psychology of Saving Behavior

My last post (#42) provided a layman's summary for laymen of the paper by Pascaline Dupas and Jonathan Robinson (D & R) on “Why Don’t the Poor Save More? Evidence from Health Savings Experiments” in Kenya.  My Freedom from Hunger colleagues found this very helpful for their own work; they had some comments I share more broadly here. First, they found it hard to keep the four saving read more...

The Psychology of Saving for Non-Economists and Non-Psychologists

Earmarking, mental accounting, commitment, present bias, time inconsistency, heterogeneity of time preferences – what are they talking about, how do they fit together? The academic discussions and papers of behavioral economists usually focus on one or two of these concepts at a time, don’t bother to give clear definitions and fail to tie them together in a coherent picture. That’s not a read more...

Does Access to Microfinance Help Poor Households Build Savings? Part II

We have to ask the client how much she or her household holds in total savings in whatever variety of mechanisms she and other household members use. Accurate answers are quite hard to get. This post looks at the answers some researchers have gotten. Sebstad and Cohen (2000) wrote that “findings from studies on the impact of microfinance programs on savings are surprisingly limited.” Still, read more...

Does Access to Microfinance Help Poor Households Build Savings? Part I

Sebstad and Cohen identified three main pathways through which microfinance services can reduce vulnerability: income-smoothing, building assets (including financial, physical, human and social assets) and empowering women. In my last post (# 39), I reflected on the ambivalent attitude of the microfinance movement toward savings (financial assets) due to a history of divergent interests of clients read more...

Accumulating Financial Assets: Microfinance Ambivalence about Savings and the Poor

Of the three main pathways through which microfinance services can reduce vulnerability (income-smoothing, building assets (including financial, physical, human and social assets), and empowering women), the last two posts covered the evidence for income-smoothing and accumulation of physical assets. Now I turn to financial asset accumulation, which for the poor basically means savings. Before get read more...

Does Access to Microfinance Help Poor Households Accumulate Physical Assets?

Sebstad and Cohen identified three main pathways through which microfinance services can reduce vulnerability: income smoothing, building assets (including financial, physical, human and social assets), and empowering women. In my last post (# 37), I concluded that microfinance increases opportunities to diversify sources of income, but we lack evidence-based confirmation that this leads to bet read more...

Does Microfinance Participation Improve Income-Smoothing by Poor Households?

In my last post (# 36), I outlined the five risk-management strategies described in the seminal March 2000 paper by Sebstad and Cohen. Two are precautionary strategies (Income-Smoothing and Asset-Building), and three are loss-management strategies (Consumption-Modifying Strategies, Income-Raising Strategies and Personal Financial Intermediation). Here is the overarching question of Theme Four: read more...

Does Microfinance Participation Increase the Resilience of Poor Households?

In my last post (# 35), I proposed a departure from the classic microfinance theory of change to reflect the greater use of microfinance to support household resilience for poverty alleviation than to invest in microenterprise development for poverty reduction. Here is the revised theory: People from poor households tap microfinance services to smooth consumption and build assets to protect aga read more...

What If We Turn the Microfinance Theory of Change on Its Head?

After a hiatus of three weeks to catch up on my reading, it is time to start posting for Theme Four: to explore whether microfinance participation results in “more household savings and better consumption-smoothing.” Theme Three explored the validity of the classic microfinance theory of change: people from poor households tap microfinance services (primarily loans and/or savings) to invest read more...