Research Insights: Can Savings Groups Foster Access to Formal Financial Services?
Peer Reviewed
Date issued
October 2021
Publication
Subject
Savings Group;
Bank Loan;
Credit Access;
Saving;
Financial Service;
Financial System;
Housing Quality;
Poverty;
Microfinance
JEL code
C93 - Field Experiments;
D24 - Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity;
D92 - Intertemporal Firm Choice, Investment, Capacity, and Financing;
G22 - Insurance • Insurance Companies • Actuarial Studies;
O12 - Microeconomic Analyses of Economic Development;
O13 - Agriculture • Natural Resources • Energy • Environment • Other Primary Products;
O16 - Financial Markets • Saving and Capital Investment • Corporate Finance and Governance;
Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets;
Q14 - Agricultural Finance
Country
Peru
Category
Catalogs and Brochures
Savings groups provide access to financial services to households who are underserved by formal financial institutions and microfinance lenders. Access to this model in rural Peru reduced vulnerability to idiosyncratic shocks and led to greater investments in housing quality and specialization in agricultural activities, especially in poorer villages. Savings groups reduced access to formal loans and increased reliance on microfinance loans, which goes against the graduation hypothesis. The negative effect on access to formal loans is driven by villages with higher poverty levels and lower pre-treatment access to formal credit.
