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Odell Presents Savings Group Research for the Gates Foundation

Kathleen Odell, co-director of the Brennan School’s Center for Global Peace through Commerce, co-authored a report for the Small Enterprise Education and Promotion Network​ that surveys the research on the effectiveness of savings groups in aiding the estimated 2.5 billion people around the world who have no access to formal banking services. 

Odell is associate professor of economics in the Brennan School of Business.

"The Evidence-Based Story of Savings Groups: A Synthesis of Seven Randomized Control Trials," which Odell co-authored with Megan Gash of ​the international development organization Freedom From Hunger​, compiles the results of seven separate studies on Savings Group initiatives in seven developing countries. 

The Bill and Melinda Gates Foundation provided funding for the paper.

Savings groups have been a popular financial inclusion strategy encouraged by international development agencies since the 1990s. Savings groups generally comprise a group of 15-30 people, usually women, who meet on a regular basis to save what money they can in a common fund. This common fund is then used to support loans to group members as needed, with interest on the loans providing a return on the members' investments. 

"The goal of our paper was to pull the results of these seven studies together into one simple, concise, clear document that could communicate the results of these studies to not only the development practice community but also the funding community," Odell says. 

Among the report's findings are: 

  • Savings group members tend to be relatively wealthier and more socially and financially active than non-members (though they are still very poor).
  • The availability of savings groups increases savings and the use of credit, but findings on asset ownership are mixed.
  • These increased savings do not occur at the expense of consumption spending, and do not have a negative impact on household expenditures.
  • Savings groups contributed less than expected to increases in social capital and women's empowerment.
  • Households with access to savings group programs showed increased food security.

"The study is already proving useful to the development practitioner community in the sense that it shows not only a variety of ways that savings groups are working well and working pretty much as expected, but also points to a few really important ways that programs can be changed or improved to have a more substantial impact," Odell says.

The full report is available for download from the SEEP Network​.

Image courtesy Jeff Ashe