Testing Savings Product Innovations Using an Experimental Methodology

Abstract

This paper advocates a rigorous, scientific approach to the evaluation of innovations in micro-savings products. Such rigorous, randomized evaluations can help microfinance institutions (MFIs) have a clearer sense of why certain products are successful while others are not, and can help researchers and policymakers investigate the mechanisms and incentives involved with successful savings mobilization. However, randomized evaluation designs are not for all MFIs, as they involve a large degree of planning and resources. Furthermore, although product design matters, many other issues (such as organizational capacity, internal controls, accounting systems and regulatory environment) matter greatly for the success of a savings program. This paper describes what is involved in carrying out a randomized evaluation design once a savings product has been developed, and how to design and implement appropriate survey instruments to analyze accurately the welfare impact of savings innovations. The paper is intended to serve as a technical guide for the use by administrators of MFI’s, and by collaborative external agency staff sharing an interest in microsavings product development.