Many studies have looked at the experiences of poor savers and there is plenty of anecdotal evidence that savings accounts have resulted in greater asset accumulation, better risk mitigation, and other benefits for poor households. But, to what extend does a hard look at the evidence support a claim that savings accounts actually improve welfare?

This paper reviews the experimental evidence (both RCTs and natural experiments) regarding the impact of improved access to savings. While there are precious few pieces of evidence documenting the development benefits of formal savings services for poor households, the few rigorous studies that exist show savings accounts enhance the ability to save up for productivity enhancing investments and weather unexpected bad times. They may even empower women to make financial decisions within the household.

The authors of this study investigate whether having access to microinsurance improved the quality of healthcare for poor patients. They found that having access to insurance was not significantly associated with receiving better quality healthcare. The paper provides recommendations for healthcare providers to improve the quality of medical care received by their clients and suggestions for further research on the mechanisms that determine health care quality.

M‐PESA is a small‐value electronic payment and store of value system that is accessible from ordinary mobile phones. It has seen exceptional growth since its introduction by mobile phone operator   Safaricom in Kenya in March 2007: it has already been adopted by 9 million customers (corresponding to 40% of Kenya’s adult population) and processes more transactions domestically than Western Union does globally. M‐PESA’s market success can be interpreted as the interplay of three sets of factors: (i) pre‐existing country conditions that made Kenya a conducive environment for a successful  mobile money deployment; (ii) a clever service design that facilitated rapid adoption and early capturing of network effects; and (iii) a business execution strategy that helped M‐PESA rapidly reach a  critical mass of customers, thereby avoiding the adverse chicken‐and‐egg (two‐sided market) problems that afflict new payment systems.

Evaluates the presence of market imperfections such as free-riding in group-based mechanisms.

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The authors describe important trade-offs that microfinance practitioners, donors, and regulators navigate. Drawing evidence from large, global surveys of microfinance institutions, they find a basic tension between meeting social goals and maximizing financial performance.  Potential trade-offs therefore arise when selecting contracting mechanisms, level of commercialization, rigor of regulation, and the extent of competition. Meaningful interventions in microfinance will require making deliberate choices – and thus embracing and weighing tradeoffs carefully.

A review of recent innovations that are improving the quantity and quality of financial access.  Authors relate the innovations and empirical evidence to theoretical ideas, drawing links in particular to new work in behavioral economics and to randomized evaluation methods.

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Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in default and larger groups after three years in pre-existing areas, and no change in default but fewer groups created after two years in the expansion areas.

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Describes the challenges of providing reliable banking services to the poorest customers in a commercially viable way.

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We conducted a field experiment to test whether savings constraints prevent the self-employed from increasing the size of their businesses. We opened interest-free savings accounts in a village bank in rural Kenya for a randomly selected sample of poor daily income earners. Despite the fact that the bank charged substantial withdrawal fees, take-up and usage was high among women and the savings accounts had substantial, positive impacts on their productive investment levels and expenditures. These results imply that a substantial fraction of daily income earners face important savings constraints and have a demand for formal saving devices (even for those that offer negative de facto interest rates).