Creating incentives to save among microfinance borrowers: a behavioral experiment from Guatemala

We report on an experiment in which a new set of commercial savings products, informed by the behavioral finance literature, were offered to the microfinance borrowers of Guatemala's largest public-sector bank. We find that prompting savings at the time of loan repayment leads savings deposits to double relative to the control, and framing a contribution of 10% of the loan payment causes them to double again. Loan repayment and savings accumulation appear to be complementary. Mainstreaming the most successful product tested here would allow the bank to realize savings sufficient to leverage 50% of the short-term loan portfolio.

Atkinson, de Janvry, McIntosh and Sadoulet (2010)N/A (locations unspecified).RCT.New commercial savings products, with no financial incentives or penalties, were offered to existing borrowers.Prompting for savings at the time of loan payments doubles savings, while suggesting a savings deposit equal to 10% of the loan repayment causes savings to double again. Women are significantly more likely to take up the offer of a savings account. However, women's accumulated net savings are significantly lower overall.http://irps.ucsd.edu/assets/001/501312.pdf1,375 borrowers from 20 microfinance branches of Guatemala's largest public sector bank.