Increasing access to formal savings services may help the poor to start or expand a business and cope with risks, such as medical emergencies or droughts. Existing evidence from Kenya suggests that small business owners, in particular, can benefit from access to a formal savings account as it allows them to save up daily profits to make larger, more productive investments. Despite such promising benefits, the vast majority of people in the developing world lack access to formal savings services, and even when they do have access, demand for formal savings services is often very low. The poor instead frequently rely on costly devices like "susus"—agents who charge a fee to collect money for secure keeping—or strategies that restrict the use of savings, such as rotating savings and credit associations (ROSCAs)—groups that pool members’ regular contributions for lump-sum distribution to one member. A majority of rural households store cash at home where it is prone to loss, theft, and the demands of neighbors and family. Given these alternatives, how does expanding access to formal savings account impact the lives of poor households? Can savings products be designed to better serve the actual needs of this vulnerable population in order to increase demand?
In order to better understand the impact of expanding access to formal savings accounts, parallel studies are being conducted simultaneously in Chile, Malawi, the Philippines, and Uganda.
Chile: Although Chile boasts an upper-middle-income economy and has a vibrant financial sector, a survey in the Araucanía region, where the study takes place, revealed that 33 percent of the population did not use a savings account.
Malawi: A 2009 study found that 55 percent of Malawians did not have access to any type of financial institution, formal or informal. Furthermore, only 19 percent of the overall population used a formal bank.
The Philippines: Much of the rural population in the Philippines still lacks access to formal financial services. In 2009, 37 percent of municipalities did not have access to banking services.
Uganda: A 2006 study found that 62 percent of Ugandans do not have access to any type of financial institution and only 16 percent of the population uses a commercial bank. Total savings remains low: from 1999-2009, Uganda's gross domestic savings averaged 9.3 percent, compared to 21 percent worldwide and 12 percent for the least developed countries.
In order to evaluate the impact of access to a formal savings product, researchers partnered with a commercial bank or credit union in each of the study countries. After completing a baseline survey in areas where the partnering institution operates, a sample of local households were randomly assigned to either a treatment or comparison group. Households in the treatment group received a voucher enabling them to open a free savings account with the local branch of the partner institution. They also received procedural assistance in opening the account.
Follow-up surveys at six, twelve, and eighteen months will be used to estimate the impacts of the savings accounts on a range of household activities, including agricultural and business practices, expenditures, household income, response to adverse events like medical emergencies, and savings and credit practices. Qualitative data will be collected to understand the mechanisms through which access to a bank account affected the study participants.
Results and Policy Implications
2010 - 2013
 CGAP. 2009. “Financial Access 2009: Measuring Access to Financial Services around the World.” World Bank Group.
 FinScope Malawi . 2008. “Demand Side Study of Financial Inclusion in Malawi.”
 Jimenez, Eduardo C. 2010. Financial Access: An Essential Condition. Presentation at the OECD-Banque du Liban Conference on Financial Education. http://www.oecd.org/dataoecd/57/21/46256657.pdf
 FinScope Uganda. 2007. “Results of a National Survey on Access to Financial Services in Uganda.” http://www.fsdu.or.ug/pdfs/Finscope_Report.pdf.
 World Bank. 2010. World Development Indicators 2010 [Online Database]. Washington, DC: The World Bank.
Photo Credit: J-PAL