Mobilizing Deposits in the World of Microfinance

Economic shocks often cripple and wipe out years of gains for those residing near or below the poverty line. Microloans can stimulate upward mobility, but building an adequate nest egg to call upon when times are tough is perhaps a greater challenge.

The following docs touch on the role of savings in the developing world, how microfinance institutions mobilize deposits, and the effect the financial crisis has had to date.

 

WSBI: “Microfinance Services by Savings Banks in Africa” (2008)

The report looks at savings services and activities in Africa.

http://www.wsbi.org/uploadedFiles/Publications_and_Research_(WSBI_only)/microfinance%20leadership%20of%20WSBI%20African%20members%20GB%20screenview5.pdf

 

German Institute of Global and Area Studies: “Savings, Credit and Insurance: Household Demand for Formal Financial Services in Rural Ghana” (2009)

This paper estimates the determinants of household demand for savings, loans and insurances by applying a multivariate probit model on household survey data from rural Ghana.

http://collab2.cgap.org/gm/document-1.9.30293/55867.pdf

 

Microfinance Insights: “Prepared for Rain: Nigeria Says, Not if but When” (2009)

The article explains how the Nigerian microfinance sector has been affected thus far, and how the ability of Nigerian MFIs to mobilize savings and deposits are just one way they are holding off the circling storm.  

https://www.microfinanceinsights.com/articles_new.asp?member=nonmembers&id=393

 

CGAP: “The True Cost of Deposit Mobilization” (2007)

CGAP investigated the true, all-in cost of deposits at five different financial institutions serving poor clients using activity-based costing (ABC). The goal was to determine a) how expensive it really is to mobilize deposits from poor people, and b) where costs can be reduced by identifying major cost drivers.

 http://www2.cgap.org/gm/document-1.9.2117/45789_file_THE_TRUE_COST_OF_DEPOSIT_MOBILIZATION.pdf

 

 IADB: “How Should Microfinance Institutions Best Fund Themselves” (2006)

 Referencing a study of 61 regulated MFIs in 9 Latin American countries, the paper looks at the advantages and disadvantages of four major funding sources to MFIs: deposits, borrowings, and stock and bond issue.

 http://www.iadb.org/sds/doc/intD4C.PDF

 

Microfinance Insights: “Will the Cambodian Microfinance Sector Survive this Crisis?” (2009)

The article looks at the Cambodian microfinance sector as it confronts the crisis. Although the poor will be impacted indirectly—decreases in income and remittances–most Cambodian microfinance institutions (MFIs) expect the demand for services, particularly savings products, to increase.

https://www.microfinanceinsights.com/articles_new.asp?member=nonmembers&id=391

 

National Bureau of Economic Research: “Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya” (2009)

This paper presents results from a field experiment designed to test whether savings constraints prevent the self-employed from increasing business size. The study found that savings accounts had a substantial and positive impact on productive investment levels and expenditure for women, but had no effect for men.

http://collab2.cgap.org/gm/document-1.9.30250/11.pdf

 

The Foundation for Development Cooperation: “Effects on Microfinance of the 1997-1998 Asian Financial Crisis” (1998)     

The paper provides a detailed look at the microfinance sector’s performance in various Southeast Asian countries. There is some information on the role savings played.    

http://www.bwtp.org/publications/pub/effects_on_microfinance.pdf

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