Mobilization of Personal Savings among Microfinance-Participating Households: A Survey in West Bengal, India

Kundu, AMIT (2013): Mobilization of Personal Savings among Microfinance-Participating Households: A Survey in West Bengal, India. Published in: Journal of Rural Cooperation , Vol. 41, No. No.2 2013 (28 December 2013): pp. 199-214.

Abstract

This paper attempts to assess whether participation in a microfinance program helps households generate personal savings, as distinct from savings through compulsory contributions to the program. We consider a microfinance program initiated by the Government of India (the SGSY scheme),which is operated under a joint liability credit system that requires formation of Self-Help Groups (SHG).The empirical design relies on two samples of respondents: a “treatment group” of households participating in the microfinance program and a “control group” of non-participating households of similar characteristics. Using data collected at two points in time (April-July 2004baseline and September-December 2009 endline), we show that although income increases more in treatment-group households, the increase in personal savings of the microfinance-participating households over the study period is less than for the non-participating households.

• Item Type: MPRA Paper
• Language: English
• Keywords: Microfinance, Savings, Policy Evaluation, Self-Help Groups, SGSY
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R20 - General

References

Anderson, S. and J.-M.Baland (2002).“The Economics of ROSCAs and Intra-Household Allocation.”Quarterly Journal of Economics 117(3): 983-995.

Banerjee A., E. Duflo, R.Glennerster, and C.Kinna (2010).“The Miracle of Microfinance?Evidence from a Randomized Evaluation.”AbdulLatifJameel Poverty Action Lab at MIT (June 30).

Basu, K. (1997).Analytical Development Economics: The Less Developed Economy Revisited. Cambridge, MA: The MIT Press.

Besley, T., S. Coate, and G. Loury (1993). “The Economics of Rotating Savings and Credit Associations,.” The American Economic Review 83(4): 792-810.

Bhaduri, A. (1973).“A study in Agricultural Backwardness under Semi-Feudalism.”Economic Journal 83:120-137.

Collins, D., J.Morduch, S. Rutherford, and O. Ruthven (2009).Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton, NJ: Princeton University Press.

Chaudhuri S., J. Jalan, and A.Suryahandi (2002).Assessing Household Vulnerability to Poverty from Cross Sectional Data: A Methodology and Estimates for Indonesia.Discussion Paper, New York: Columbia University.

DeSilva, I. (2012).“Evaluating the Impact of Microfinance on Savings and Income in Sri Lanka: Quasi-Experimental Approach using Propensity Score Matching.”Margin – The Journal of Applies Economic Research 6:47-74 (May).

Guo,S. and M. F. Fraser (2010). Propensity Score Analysis: Statistical Methods and Applications. SAGE Publications (Chapter 4).

Heckman, J. (1976). “The Common Structure of Statistical Models of Truncation, Sample Selection, and Limited Dependent Variables and a Simple Estimator for such models.”Annals of Economic and Social Measurement 5(4): 475-492

Heckman,J. and J. Smith (1995).“Assessing the Case for Social Experiment.”Journal of Economic Perspective9: 85-110.

Hirschland, M., ed. (2005).Savings Services for the Poor: An Operational Guide, Hartford, CT:Kumarian Press.

Kabeer, N. (2001). “Conflict over Credit: Re-Evaluating the Empowerment Potential of Loans to Women of Bangladesh.” World Development 29: 63-84.

Khalily, M. A. Baqui (2004).“Quantitative Approach to Impact Analysis of Microfinance Programme in Bangladesh – What have We Learned?”Journal of International Development, Special Issue on Social Impact of Microfinance 16(3): 331-354 (April).

Kundu, A. (2008).“Impact of SGSY Scheme on Self-Help Group Members in West Bengal, India.”Afro-Asian Journal of Rural Development 41(2):83-104 (July-December).

Kundu, A. (2012). “Can Microfinance Programme and NREGS Jointly Improve the Economic Condition of the Participating Rural Households? A Social Experiment.”Asian Journal of Empirical Research 2(2): 40-54.

Ministry of Panchayati Raj (2009). A Note on the Backward Regions Grant Fund Programme.National Institute of Rural Development, Hyderabad, India (September 8).

Wright, G., M. Hossain,andS. Rutherford (1997).“Savings: Flexible Financial Services for the Poor” in G. Wood and I. Sharif (eds.), Who Needs Credit? Poverty and Finance in Bangladesh. Dhaka University Press.