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A Review of Commitment Savings Products in Development Countries

Author

Listed:
  • Ashraf, Nava

    (Harvard University)

  • Gons, Nathalie

    (Innovations for Poverty Action)

  • Karlan, Dean S.

    (Princeton University)

  • Yin, Wesley

    (Princeton University)

Abstract

Many financial institutions in developing countries offer savings products. Yet, little has been done to assess systematically and quantitatively the relative merits of different product designs. This paper first examines different designs that provide incentives to clients to commit to save. Mechanisms are divided into deposit side mechanisms that help clients make regular deposits, and withdrawal-side mechanisms that help clients restrict the use of their funds except for well-planned uses or emergencies. Then, using results from a short web-based survey of microfinance instititutions, we describe different commitment savings products in use around the world.

Suggested Citation

  • Ashraf, Nava & Gons, Nathalie & Karlan, Dean S. & Yin, Wesley, 2003. "A Review of Commitment Savings Products in Development Countries," ADB Economics Working Paper Series 45, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0045
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    References listed on IDEAS

    as
    1. Robert M. Townsend, 1995. "Consumption Insurance: An Evaluation of Risk-Bearing Systems in Low-Income Economies," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 83-102, Summer.
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    3. Neumark, David, 1995. "Are Rising Earnings Profiles a Forced-Saving Mechanism?," Economic Journal, Royal Economic Society, vol. 105(428), pages 95-106, January.
    4. Richard H. Thaler, 2017. "Behavioral Economics," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 1799-1805.
    5. Rebecca M Vonderlack & Mark Schreiner, 2002. "Women, microfinance, and savings: Lessons and proposals," Development in Practice, Taylor & Francis Journals, vol. 12(5), pages 602-612, November.
    6. Christopher Udry, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 495-526.
    7. Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 609-643, October.
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    Cited by:

    1. Derksen, Laura & Kerwin, Jason Theodore & Reynoso, Natalia Ordaz & Sterck, Olivier, 2021. "Appointments: A More Effective Commitment Device for Health Behaviors," SocArXiv y8gh7_v1, Center for Open Science.

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    More about this item

    Keywords

    commitment savings; financial institutions; microfinance; savings products; withdrawal mechanisms;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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