Another interesting document recently – this one a qualitative study of group liability borrowers in India, which highlighted the role of compulsory savings in both easing loan repayments and increasing borrowers’ confidence to take on larger loan amounts. I find this fascinating in part because it’s somewhat counterintuitive – if compulsory savings place a greater burden on borrowers to provide some money every week, all other things being equal, I would have expected such a program to be a disincentive for participation, rather than an incentive. The study suggested that women were more confident in their borrowing because they knew they could draw down their savings if necessary, which almost suggests that compulsory savings functions as a type of emotional capacity building for financial planning. Cool result, although it needs more quantitative testing.
[NB: Can't find the citation for this one either! Definitely kicking myself for not including it in the first place now.]
Where can I found that study?
Hi Fernando,
I’ll have links to the original studies in a few weeks, when I’m back home in the US – will put up a reference post then, so that people know where to look for updated links. Thanks for asking! I needed to have a few people push me in that direction. : )