NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, May 5, 2017

Savings groups popular in rural areas of developing countries — in which people pool money for saving and borrowing — empower women, increase business investment, and provide greater access to financial services, according to a three-country study released in Proceedings of the National Academy of Sciences.

The study, conducted in Ghana, Uganda, and Malawi, tracked households for two to three years, with 61% of participants completing a full 8-12 month savings cycle. The study found that access to village savings and loans associations (VSLAs) increased the number of household-operated businesses by 6%. It also boosted the length of time those businesses lasted by 9%, and increased monthly business profits by 24%, but did not increase total household income or food security. Longer-term tracking of participants may help learn whether impacts sustain and grow, or dissipate, said the researchers.